Insure your home
Victims of last year's floods paid £525 million in VAT on repairs to their homes, official figures reveal. With a third of us lacking basic household insurance, what better reason to bite the bullet and protect your wallet from flood damage?
This will cover both the structure of your property and its permanent fixtures and fittings such as baths and toilets, fitted kitchens, bedroom cupboards and interior decorations. It will also insure against events that damage your home, such as lightening or an earthquake; subsidence; storm and flood and falling trees and branches.
This will cover the damage or loss of the possessions in your home that you would normally take with you if you moved. You can also include cover for accidental damage and items taken away from home, such as a camera, mp3 player or laptop, however this will increase the cost. You don’t have to buy buildings and contents from the same provider and it’s worth getting a few quotes to find the best deal.
How much cover do I need?
The sum assured is the maximum amount the insurance company will pay out in the event of a claim. The Association of British Insurers (ABI) say it is your responsibility to ensure that the sum insured meets the full cost of rebuilding your property and replacing the contents inside. Underinsurance could mean that your claim is reduced or rejected altogether.
Policies exclude certain risks and possessions and these will be explained in the policy document. It’s crucial you read and understand them to avoid being stung when you come to claim. Common exclusions include if you let your home or if it is unoccupied for more than 30 consecutive days.
Check your cover
Review your policy regularly to ensure it still meets your needs and provides adequate cover. If you’ve recently made some big purchases, such as gadgets or art work for example, you could find yourself underinsured if you haven’t informed your provider. It will usually result in an increase in your premiums, so whenever you come to renew, always shop around for the best deal.
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.
This type of insurance covers the structure and fabric of your property – the bricks and mortar, not the contents (for which you need contents or home insurance). If you have a mortgage, the lender will insist you have a suitable buildings insurance policy in place. Many lenders offer their own building insurance policies, but you don’t have to buy it from your own lender but you have the option of shopping around. The insurance covers you for the rebuilding costs, not the market value of the property.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.