It's true that you can get insurance for almost anything these days. Buildings insurance, contents insurance, life insurance, and critical illness cover are the most common types of insurance that people buy.
Mortgage payment protection insurance (MPPI) is another type of insurance that many homeowners choose to get. If you get hurt, sick, or lose your job, this type of insurance can cover your mortgage payments for a while.
Insurance for Buildings
When you get a mortgage, every lender will require you to have a buildings insurance policy.
If you own the freehold, which includes both the building and the land it stands on, it is your job to get this insurance. If you own a lease, you need to make sure that your freeholder has set up insurance for you. This policy is often paid for by leaseholders as part of their annual management payments to the freeholder.
As long as you have a mortgage on your property, the lender will also care about it. So, the lender will want to make sure that your property is covered in case of fire, sinking, or strong storms.
You can choose to get insurance on your own or through your mortgage lender. In either case, you may have to show proof that you have a good policy. Most lenders won't make you get contents insurance for your home, even though it's usually a good idea.
Contents Insurance
It is very common to get a policy that covers both the building and the things inside it. Most insurance companies will offer to set up a policy in this way. If you ever need to make a claim, your insurance company will pay for the cost of replacing broken items. Usually, there is a deductible, but this is agreed upon before you buy the policy.
Before you apply for contents cover, you must have an inventory of your things done. This is to make sure that you are not underinsured or overinsured. Some contents insurance policies offer "new-for-old" coverage, while others may just give you cash. Before you apply, decide which one is best for you. Most people will prefer a "new for old" policy because it makes sure they get an exact replacement or even an updated version of the goods they lost. This way, you won't have to go through the trouble of shopping around for a replacement.
Contents insurance rates can be lower if you have a burglar alarm, smoke alarms, or even live in a neighbourhood watch area. There are many places to get contents insurance, such as traditional insurance companies, banks, and supermarkets. Shop around to find the best coverage.
Insurance to cover mortgage payments (MPPI)
Mortgage payment protection insurance can pay your monthly mortgage payments if you get hurt, sick, or lose your job. MPPI is a mix of different types of insurance, but you can choose to only get one type of coverage. For example, you may only want unemployment insurance if you already have accident and sickness insurance through your job.
About 60% of new mortgage borrowers get MPPI, but only 33% of all mortgage borrowers have it. The price of the policy may be the main reason for this. As with any other kind of insurance, it pays to look around for the best deal. Some mortgage deals will even include free MPPI, but it will usually only cover you for six months to a year.
Again, it's important to review your insurance coverage on a regular basis to make sure you're not underinsured or that your policy hasn't run out. When you do a remortgage to increase the size of your mortgage, you will also need to increase the MPPI to match.
