The UK’s booming insurance industry is the fourth largest in the world, according to Statista, and offers an enormous range of insurance products.

Among the most common types of general insurance that you may have at some point in your life are home, car, travel and pet insurance. Here we explain when you might need these types of insurance policies, how they work, and what they do – and don’t – cover.

Home insurance

The two main types of home insurance that you might need are buildings and contents insurance. As their name suggests, the former covers the building itself, while contents cover insures the items you have within your home.

Here, we explain both types of home insurance policy, but for more detail read our article, Your essential guide to home insurance.

Buildings insurance

What is it?

Buildings insurance covers the physical structure of your home. The average buildings insurance policy currently costs around £110 a year, according to comparison website MoneySuperMarket, but the actual price you pay will depend on your property and the specific risks it may face, such as whether it may be prone to flooding or subsidence, for example.

What does it cover?

Buildings insurance is designed to pay out enough for repairs or to rebuild your property if it’s damaged or destroyed. Policies will usually include things like outhouses such as garages and sheds, as well as fences, pipes, cables and drains up to a certain limit.

The type of scenarios that may be covered by buildings insurance include damage to your home as a result of: fire, smoke, explosions, flood, storms, frozen or burst pipes, subsidence, natural disasters, fallen trees, lamp posts, aerials or satellite dishes, theft, attempted theft, vandalism or malicious damage, vehicle or aircraft collisions.

Do you need it?

If you have a freehold property with a mortgage, you will usually need to have buildings insurance as part of your mortgage agreement. Mortgage providers may offer you buildings insurance as part of their package, but you should also be able to find your own policy on the open market by checking comparison websites.

If you have a leasehold property with a mortgage, you may either need to have buildings insurance with a certain insurer, or the freeholder might take out the policy and pass the cost of it on to you.

If you are living in a rented property, it’s the landlord’s responsibility to arrange and pay for the building’s insurance policy.

Is there anything else you need to know?

If you have a property in an area that is at a heightened risk of any of the scenarios we list above, for example, if your property is situated on a flood plain, you may have to get an enhanced level of protection, which means it’s very likely that you will be paying more for your policy.

Contents insurance

What is it?

Contents insurance is designed to provide cover for your possessions and those of the people you live with. The average cost of contents insurance in the UK is around £56 a year, according to MoneySuperMarket, although this will vary depending on your personal circumstances and, of course, the value of items in your home.

What does it cover?

At a minimum, most policies will cover any damage or loss of possessions caused by flooding, storms, fire or theft. Some policies may also cover accidental damage, but you will usually have to pay more for this as a policy add-on

When you buy a policy, you will usually be asked to detail how much your possessions are worth, and if you have any big-ticket items, such as TVs, jewellery or electronics. Some policies will apply a new for old clause, meaning the insurer will pay for the replacement of an old item at the price of a new version. However, check your policy’s wording as you may find it only pays up to the amount your item was worth when it was lost, damaged or stolen.

Do you need it?

While there’s no legal obligation to have contents insurance, it’s worth considering how you would go about replacing your belongings if you lost them. It could work out a lot cheaper, in the long run, to have a contents insurance policy than to have to replace all of your belongings.

Is there anything else you need to know?

Many policies carry an excess, which is the amount you are liable to pay in the event of a claim before your insurer will pay out.

If you underestimate the value of your possessions, then your insurer will not pay any more than your estimation. So it’s really important that you make sure you are comfortable with the level of cover you have opted for.

Some insurers also provide you with the option of insuring the possessions that you frequently take away from your home, such as mobile phones, jewellery and cameras, but this will usually come at an additional cost.

If you need buildings insurance or contents insurance, or both, you can use our home insurance comparison tool to find the best deal for you.

Car insurance

It’s a legal requirement for anyone driving a vehicle in the UK to hold one of the three main types of car insurance. You will also need insurance for any car you own that is parked on the street, driveway or in a garage, even if you aren’t currently driving it.

There are three different levels of car insurance: Third party, third party, fire and theft and comprehensive.

Do you need it?

Yes, if you own or drive a car in the UK, you need some form of motor insurance, with third party cover being the minimum level of cover.

Third party car insurance

What is it?

Third party is the minimum level of car insurance and provides you with cover for any damage you may cause to someone else’s car or any injury to another person.

What does it cover?

Essentially, third party insurance covers the costs of any damage or injury that you might cause to other vehicles or people (or the third party that the policy name refers to). With this type of cover, damage to your own vehicle or personal property isn’t covered. The policy is simply designed to payout, if needed, to repair damage to the other vehicle, or in the case the driver or person(s) involved in the accident are injured

Is there anything else you need to know?

With this level of insurance, your vehicle is not covered against damage or loss in the case of an accident, so you will need to cover this cost yourself, which depending on the value of your car could be expensive. Generally, it’s only worth considering this level of insurance if your car is worth very little and you do not have anything of value in it.

It’s worth noting, too, that the lowest level of cover doesn’t necessarily mean the cheapest policy. Over the years, insurers have identified drivers looking for low levels of cover as the ones most likely to have an accident, so the premiums are often higher anyway. Uswitch carried out some experiments on the costs of the different levels of insurance and found that a 50-year-old driver with more than 15 years’ worth of experience, a no claims bonus, driving a Ford Fiesta and living in Coventry would pay the following for the different levels of cover:

  • Comprehensive: £221
  • Third party, fire and theft: £218.68
  • Third party only: £229.

Third party, fire and theft car insurance

What is it?

This is the next level up from third party cover and provides an additional layer of protection for your vehicle against damage or loss from theft or fire.

What does it cover?

You will have all the elements of third party cover with the additional protection against the costs of:

  • Replacing your car if it is stolen and can’t be recovered;
  • Repairing any fire damage to your car, which will usually cover both arson and accidental fire;
  • Repairing damage to your car after a break in, which will usually cover any locks that were damaged during attempted theft or the cost of stolen items such as a radio.

Is there anything else you need to know?

With this level of insurance, your vehicle is still not covered against damage or loss in the case of an accident, so you will need to cover this cost yourself.

Comprehensive car insurance

What is it?

Also known as fully comprehensive insurance, this cover provides protection for both of the above scenarios, as well as complete cover for your car. The average cost of comprehensive cover in the UK is around £430 per year, according to the Association of British Insurers (ABI), but this can vary considerably from person to person.

What does it cover?

Generally, comprehensive insurance will cover damage to your car and yourself, as well as provide compensation to a third party if you are involved in an accident. So unlike the last two types of car insurance, if you are involved in an accident, you can claim to repair the damage to your car.

With comprehensive insurance, there is a wide range of extras that your insurer might offer as part of your policy, while others may provide them at an additional cost. For example, these might include transport home after an accident, vandalism cover, a courtesy car, child seat cover, windscreen cover and breakdown cover.

Is there anything else you need to know?

Not all comprehensive policies were created equal, so it’s really important that you fully understand what is included in your policy and what is excluded. If you are looking to bring the price of your insurance down, read our article Five ways to cut car insurance costs.

If you are looking at buying a car insurance policy, or yours is up for renewal, use our car insurance comparison tool to help you compare costs.

Travel insurance

What is it?

Travel insurance is designed to pay for the cost of loss, medical treatment or trip alteration while you are on holiday, either abroad or in the UK.

What does it cover?

Every travel insurance policy is different and will include varying levels of cover. However, most policies will include:

  • Medical cover: This covers the cost of medical treatment, which if you are in a country that pays for their healthcare could reach millions of pounds.
  • Holiday cancellation: If you have to cancel your holiday for a reason covered by the policy, this will reimburse the cost of your trip.
  • Travel delays: If your flight is delayed or cancelled, your travel insurance policy might allow you to get some or all of your money back
  • Lost, stolen or damaged belongings: If you lose or break something or an item is stolen while you are away, most travel insurance policies will cover some if not all of the cost of replacing them.
  • Personal liability: If you accidentally hurt someone or damage their property while you are away, your travel insurance might cover their medical costs or the replacement of their items.

Do you need it?

Having travel insurance is not a legal requirement when you go on a trip, but people often spend considerable sums of money on their holidays, and frequently take valuable items with them, such as phones, cameras, and laptops. Buying travel insurance can provide you with some peace of mind that you’ll be financially protected if anything happens to you or your belongings while you’re away, or if your trip is cancelled.

Is there anything else you need to know?

There are a number of different levels of cover and policies available. For more details on travel insurance and to ensure you choose the best policy for you, have a look at our article Everything you need to know about travel insurance.

Pet insurance

What is it?

Owning a pet usually involves a few trips to the vets, and pet insurance is designed to help cover the costs of any veterinarian treatment your pet might need.

What does it cover?

Pet insurance policies will usually cover the cost of vet bills if your pet is injured or develops a medical condition. If the insurance is for a dog, it will usually include third-party liability cover, which provides financial protection if your dog causes damage or injury to people or property. Third liability cover isn’t usually included in policies for cats because they are considered ‘free spirits’ and therefore owners can’t be held liable for their actions.

Do you need it?

If you have a pet, it’s likely you will take them to the vets at some stage for an issue that isn’t just standard vaccinations, or a general check-up, so it could pay to have pet insurance. The average pet insurance claim is just over £800, so if you think you might struggle to cover these costs unexpectedly, then you might want to consider taking out a pet insurance policy if it’s affordable.

Is there anything else you need to know?

There are a number of different ways of insuring your pet, so for more information on this, have a look at our article Everything you need to know about pet insurance. You can compare pet insurance policies online using our pet insurance comparison tool.

Other types of insurance

There are, of course, many more types of insurance than the core ones listed above that can offer you additional protection depending on your lifestyle, and personal needs, including:

  • Private health insurance: A type of insurance that is designed to cover the cost of private health care should you need treatment. If you think you might want this insurance, have a look at our article Do I need private health insurance?
  • Dental insurance: Not all dental treatment is provided on the NHS, so if you want peace of mind that any dental work you might need will be covered, you might consider dental insurance. We have more information about this in our article Do I need dental insurance?
  • Critical illness cover: If you are diagnosed with certain serious illnesses or disabilities during your policy term, critical illness cover will pay out a tax-free lump sum to support you until you can get back to work. We provide more detail in our article Everything you need to know about critical illness cover.
  • Income protection insurance: This type of insurance protects your income if you aren’t able to work due to illness, have a look at our article Income protection explained for more information. It can be particularly useful for the self-employed. 
  • Life insurance: There are a number of different types of life insurance, but generally they are aimed at providing your loved ones with some sort of financial support if you were to pass away. Our article What are the different types of life insurance? covers of the main options you might want to consider.

Are you considering which type of insurance policy is right for you, or have you recently taken out a policy? Do you have any tips on choosing insurance policies? If so, we’d be interested in hearing from you. You can join the money conversation on the Rest Less Community or leave a comment below.


Loading comments...

    Leave a reply

    Thanks, your comment has been saved. We will review it shortly, check back soon.

    Sorry, there was a problem saving your comment. Please refresh and try again.