Taking out a home insurance policy is a very wise thing to do, and indeed the majority of mortgage lenders insist that you have – at the very least – buildings cover in place. The mortgage lender will have made a significant investment, and they are naturally keen to protect that investment. For your part, your home is likely to be your single biggest investment, and probably the largest financial commitment you will undertake in your lifetime.
The primary purpose of buildings insurance is to ensure that the asset on which the mortgage is secured – the house, flat, apartment or bungalow – is financially protected in the event of accident. For example, a catastrophic fire burning the whole place to the ground would mean there was no longer any asset value covering the mortgage, so you would be left with hefty mortgage repayments as before, the only difference being you had nowhere to live. The risk for the mortgage lender is that you are correspondingly far more likely to default on your repayments, as your priority would be to seek alternative accommodation.
Standard buildings insurance will cover you for the rebuild value of your home as well as permanent fixtures and fittings. You may also want to consider contents insurance, as there is always the risk that your house is broken into or your buildings insurance does not cover the results of fire. It is essential to read the small print before committing to any insurance policy, as you may assume wrongly that you are safe. When the unthinkable happens, and it turns out that you weren't covered, it can be a very difficult time indeed.
Reputable insurers like Co-Operative Insurance will always show you clearly what you are covered for, and be able to offer advice on the best policy for you, as well as ways to reduce your premiums. This will often include, in the case of contents insurance, recommending you fit security devices such as mortice deadlocks and rimlocks conforming to the appropriate British Standard, and an alarm system approved by NACOSS.