It is not compulsory by law to have home insurance in the UK. That being said, some mortgage providers will only lend subject to you taking out a valid insurance policy for the building.
Not all mortgage providers do that, and they usually only require you to have buildings insurance.
In my opinion, everyone should have not only buildings insurance, but also contents insurance too.
Why you should have buildings insurance
Buildings insurance covers you for anything that can happen to the structure of your home and garden, other than things like normal wear and tear or ‘acts of god’ (natural disasters). It’s usually not that expensive to get home insurance, unless you live in an area that has a high risk of floods/subsidence, in which case it can be expensive and sometimes difficult to get insurance at all.
If you had a fire that burned your house down and you don’t have insurance, not only do you have to foot the bill for repairs or rebuild, but you still have to pay your mortgage and for somewhere to live temporarily while that happens. Your liability for mortgage payments doesn’t stop in this instance. Could you really afford to rebuild a house valued at £200,000 or £300,000 and keep up with your mortgage payments?
Also if you have no insurance on your property, then you become personally liable for any third party liabilities. Your dog bites the postman? Someone trips and falls over broken paving? You’re financially liable if they sue you. With insurance, your insurance company takes on that liability.
Why you should have contents insurance
Ok, so if you had a fire that destroyed your home, chances are it destroyed everything else in your house. Your clothes. Your furnishings. The TV. The Hifi systems. Your CD/DVD collection. All of those family heirlooms.
While still paying for your mortgage, could you afford to replace all of those items at the one time too?
So you see, by paying a monthly fee for your home insurance, you’re making sure that if the worst happens you don’t end up too much out of pocket, and you don’t have to worry about finding the funds to replace your entire home should the worst happen.
Don’t leave things to chance.
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The insurance industry does change over time but everything I have said is correct as of [date]