If you own (or are thinking of buying) your own home, then you need to think about protecting it. After all, it’s what literally protects you against the elements. Even if you’re renting, you need to think about protecting your tenancy. Here are some tips to help.
Always have an emergency fund
If you’re a homeowner, then your emergency fund will cover minor issues and/or insurance excesses. If you’re a renter, then ideally, you should have enough money to cover a deposit on a similar property and moving costs to it.
In either case, you should also have enough money to cover any unexpected expenses in other areas of your life. These might not be directly related to your housing but could impact your ability to pay your mortgage or rent.
Take insurance seriously
It’s great to have an emergency fund. Realistically, however, the average person is not going to be able to put aside enough of an emergency fund to cover serious expenses. As a rule of thumb, if something could create major legal or medical bills (including vet’s bills) then you should at least consider insurance for it. For completeness, this includes human medical bills as this will give you options outside the NHS.
You should also think about serious repair bills and if there’s any way you can be exposed to third-party claims for damages. For example, cyclists and pet owners should definitely consider taking out insurance to cover themselves for potential damage claims.
Homeowners should think about buildings insurance, potentially outbuildings insurance, possibly accidental-damage insurance and contents insurance. Renters should look at having their own contents insurance.
Last but definitely not least, you should think about protecting your finances. If you’re employed, you can look at payment protection insurance. This can be used to cover specific bills such as mortgage repayments or rent. If you’re not employed, you can still look at income-protection insurance and/or critical-illness cover.
Insurance and employment
Your employment status may have implications for your insurance cover. For example, some types of insurance may only be available to people in employment. PPI is an obvious example of this.
Likewise, some employers may provide some types of insurance to their employees. For example, many employers provide death-in-service cover. Technically, this is not life insurance, it’s relevant life insurance. From an employee’s perspective, however, the end effect is the same. If you die, your designated beneficiaries will receive a payout.
Be aware, however, that the insurance you receive from your employer may not be sufficient for your needs, let alone your wants. You, therefore, need to do your own calculations and, if necessary, top it up. Similarly, you’ll need to arrange cover for anyone who is not in employment, even if they’re not directly earning an income.
In particular, it’s vital to have suitable insurance for home-makers. If anything happens to them, you will need to pay someone else to do what they do without payment. You will quickly discover how expensive this can be particularly if they have caring responsibilities.
Take care of your credit record
Your credit record will be taken into account if you need to get a mortgage. This includes remortgaging. Many landlords will check it as part of their tenant-vetting process. Some employers check it as part of pre-employment due diligence.
Managing your credit record doesn’t usually require a great deal of effort. Basically, it amounts to paying all your bills in full and on time, avoiding taking on excessive debt and making sure all information held on you is complete and accurate. You should check your credit file at least once a year to see if there are any mistakes on it. If there are, get them corrected as quickly as possible. Do not ignore them until you want credit.
