Insurance might be one of the last things you want to worry about when you are trying to scrape together every last penny in an effort to fund the purchase of a new home. For many people, after all, insurance might appear to be something you end up paying for month after month and year after year, against an event or events which never happens.
As you can see, there is a bewildering – and seemingly off-putting – array of different types of insurance policy that might be considered by the prudent and safety-conscious home owner. Try as you might to shave what you can from the mounting costs of buying your own home, however, most of the insurance mentioned below represents a sensible choice – and some of the protection will prove simply unavoidable:
Buildings insurance – just as the name suggests, this is the cover for the structure and fabric of the property itself. The total sum insured is designed to cover the worst possible scenario of the building being destroyed in a calamitous event such as fire, flooding, storm damage or major impacts, that result in the need for complete reconstruction of your home. Adequate buildings insurance is invariably a condition of your being advanced a mortgage to buy the property;
Contents insurance – even if you are just starting out as a first-time buyer, the contents of your home are likely to amount to a tidy sum, especially if a major loss results in your needing to replace everything. Even though this form of insurance is unlikely to be strictly required, therefore, you may nevertheless want to give serious consideration to arranging such cover. Indeed, if you purchase both buildings and contents insurance in a single package, the resulting discounts may make the cost more attractive;
Life insurance – also known as mortgage life insurance, this self-explanatory cover is against your own life and the risk of your dying before the mortgage is fully repaid. If you should die within the term of the mortgage, therefore, any outstanding balance is automatically repaid by the insurance. This is cover that your mortgage lender is almost certain to require, but also gives you the security and peace of mind in knowing that your untimely death would nevertheless relieve your family or dependents of any worries about the future of the roof over their heads;
Mortgage indemnity insurance – in some cases, your mortgage lender may require an indemnity against your defaulting on your mortgage repayments for whatever reason. If you do, this form of insurance pays out to the mortgage lender any outstanding mortgage debt. Although you will be required to pay the premiums for such insurance, therefore, the only beneficiary is the mortgage lender;
Mortgage payment protection insurance – following a brief history of widespread mis-selling, payment protection insurance has gained a particularly bad press. Nevertheless, mortgage payment protection insurance might prove a useful and prudent means of ensuring that your monthly mortgage repayments continue to be made even if you are off work following an accident or illness or become unemployed through no fault of your own. This form of cover could ensure that the mortgage repayments continue to be made for up to 12 or 24 months whilst you are unable to work or redundant.