Is home insurance mandatory?

We explore whether home insurance is a legal requirement, the different types available and what you should consider when buying a policy

Is it illegal to not insure your home?

The quick answer is no.

Home insurance is not a legal requirement in the UK. But there are certain situations that require either buildings or contents insurance, depending upon whether you own the property.

If you are a homeowner or landlord, many mortgage lenders will insist upon a policy being in place to protect the loan they have made to you.

For renters, while there is no legal requirement to have either buildings (the landlord’s responsibility) or contents insurance, tenants should consider taking out insurance to cover their own possessions. 

Importantly, something called tenant liability cover is often included in tenants’ contents insurance, giving them financial protection against any damage they may cause to the landlord’s contents.

Consequences of not having home insurance

Whether you are a homeowner, landlord or tenant, insurance can provide real protection against some significant costs, should the worst happen.

Large losses (often covered by buildings insurance) could include things like:

• A roof being repaired or replaced following a storm
• Your house being underpinned after subsidence
• Property damage after a fire or flood

The cost of recovering from serious issues like these can easily run into hundreds of thousands pounds, depending on the property.

Smaller losses, such as damaged furniture (covered by contents insurance), might be more manageable individually but the cost of replacing everything in one go could be challenging. 

So, although home insurance isn’t a legal requirement, it can be valuable in protecting your property and everything inside that makes it a home.

Types of home insurance coverage

At a basic level, there are two types of insurance to consider: buildings and contents.

Buildings insurance

Buildings insurance is usually only bought by homeowners and landlords, and mainly provides cover for the structure of the home – roofs, walls and any permanent fixtures.

All policies are different but, in general terms, buildings insurance will protect against:

• Fire and smoke damage
• Flood and water damage
• Storm damage
• Subsidence and structural movement
• Theft and vandalism

Alongside these big-ticket items, some buildings insurance policies may also pay for alternative accommodation while your home is being repaired. Though some insurers offer this as an optional extra, rather than as standard.

Contents insurance

Contents insurance protects your personal belongings such as furniture, electronics and clothing. Imagine you could take the roof off your house or flat and tip it upside down – everything falling out could be covered by contents insurance.

The key cover in contents insurance includes financial protection against your belongings being stolen or damaged in the home, depending on the cover in the policy.

Home insurance for different property types

If you live in England or Wales and are a leaseholder, the freeholder usually has responsibility for buying buildings insurance on behalf of every leaseholder in the building, all of whom contribute to the cost. Contents insurance is always the responsibility of the leaseholder.

Insuring a new-build home will usually be cheaper than if you live in an older property where there are likely to be higher repair and rebuild costs. You may require a specialist insurance policy if your home is listed or has any unusual features, such as a thatched roof or timber frames.

And if you’re one of the millions of renters in the UK, while the landlord may have insurance to cover their property, it is very unlikely it will extend to your possessions so buying your own contents cover is worth considering.

Choosing the right insurance for your home

With so many different providers out there, being certain you’re making the right decision for your home can be a challenge.

It’s important to do your research and look around before making any decision on your home insurance. Pay attention to the detail because not all home insurance policies are the same.

You might find it useful to consider these questions:

• Would I be comfortable and able to pay any required excess?
• Is the payout limit too low? Click here to learn more about ‘underinsurance’.
• Does the insurer offer cover for accidental damage or alternative accommodation?

The importance of home insurance

While there is no legal requirement for homeowners, landlords or renters to buy buildings or contents insurance, the risk of having to pay for the clean-up after a flood or, worse, the complete reconstruction of your home after a fire, is too much for the majority of the population to bear.

And with cover for everything from the catastrophic to the inconvenient, home insurance becomes a crucial aspect of your financial planning rather than just another household bill.