A house insurance policy covers you for events affecting the house (e.g. a fire), while a contents insurance policy covers for events which affect property inside the house (e.g. theft or damage).

You can get home and contents insurance in one package (e.g. if you own the house and live there), get contents insurance only (e.g. if you are a tenant or flatmate) or get house insurance only (e.g. if you own a house which you are renting out). In the latter cases you don’t have to have the same insurer for both types of insurance.

The three main types of house or contents insurance are:

  • Total replacement – if your house is destroyed or damaged the insurance company will rebuild or repair it and cover all the costs involved.
  • Fixed sum insured – you and your insurance company agree on an amount that your house or contents will be insured for. This is the maximum they will pay to rebuild, repair or replace your house or contents.
  • Indemnity – if the house or contents are destroyed (or your contents are stolen), you’ll receive an amount equal to what the insured property was worth just before the event occurred. This amount may not be enough to rebuild your house or replace your possessions, but it can be a cheaper type of policy than the other two options.