Navigating the home insurance minefield can be a struggle. However, investing in the right home insurance is an essential step when you move into your new home.
From seeking the best policy for you, to making a successful claim, here is our guide to avoiding the dangers and pitfalls of home insurance.
What is home insurance, and why do I need it?
Home insurance is more important than you may think. While crime rates are on the decline in the UK, a 2014 report by the Crime Survey for England and Wales shows that up to 75 million crimes were carried out against households in 2013. From storms and leaking pipes to falling trees and fires, the risk of natural incidents causing damage your property is high. As such, home insurance—although not always compulsory—could save you a fortune. Three simple home insurance policies exist for you to choose from:
• Buildings cover, which protects your home’s structure, permanent fixtures and fittings
• Contents cover protecting your personal and valued belongings
• A combined policy which covers both the building and its contents
‘For first-time buyers, a combined buildings and contents cover is the way forward, as well as a legal requirement if you’ve got a mortgage,’ says Leigh Jackson, senior insurance writer at Money Saving Expert. Although homeowners need buildings insurance, if you are the landlord of a rented property you are responsible for this form of cover. Tenants only need to cover your contents. With this in mind, consider your circumstances as you’re doing your home insurance research: Where is your property located? What condition is it in? How likely is it to be affected by crime or natural disasters? Do you have any children likely to cause accidental damage? ‘A lot of factors determine how much you will pay for cover, but as a rough estimate, you could probably get a yearly contents cover for between £65 and £80, and a combined buildings and contents cover for around £120,’ explains Jackson.
Make the best of your insurance
There is no better time than the present to buy home insurance. According to a MoneySuperMarket report from July 2014, costs for getting yourself covered are declining, as premiums have fallen by 22 percent over the past four years. However, researching and signing up for the right home insurance isn’t always smooth sailing, which puts some homeowners off. One common error made by many homeowners is not knowing exactly what the insurer will and will not cover, whether you are dealing with accidental pet damage or damage to a property that has been left unoccupied for over 30 days. It’s important to remember that one policy is different from the next, and that each will have its own exclusions, so be sure to read the terms and conditions carefully (not forgetting the small print, of course). This issue goes hand-in-hand with the risks of being underinsured or overinsured, and with making sure you are properly covered for the value of your property and contents.
‘You need to be very careful that you’ve calculated the value of your contents correctly,’ says Jackson. ‘People often forget about smaller items such as their clothing, and how much their technological gadgets cost altogether.’ Jason McClean, director of My Property Insurer, stresses the importance of being insured for your property’s rebuild value and not its market value, which is usually a lot higher. ‘If you are a first time buyer, you may have had a survey done on the property to clarify what its rebuild value is.’ The more accurately you value your property and the better you know the nitty gritty of your insurance policy, the more likely you are to make a successful claim in the event of damage. Remember these key points when making a claim:
• Your insurer will deduct what is known as an excess cost from your claim, so make sure you’re capable of fronting the sum of this cost yourself.
• Make sure you have proof to support your claim, from receipts to photographs showing the extent of damage.
• Don’t forget that a loss adjuster might be sent to check the validity of your claim and that honesty—from your end as much your insurer’s—is always the best policy.‘Check that your claim is absolutely valid and don’t try to cheat your insurer,’ warns McClean. ‘Your insurance company is within its rights to walk away from you if you’re caught lying, and you will struggle to find insurance again.’ Leigh Jackson of Money Saving Expert agrees. ‘Home insurance isn’t a complicated product,’ says Jackson. The most important things are to understand what you’re covered for and to be honest.’
Phil's Top Tips
Consider home insurance before you even purchase your property. This story really highlights the importance of home insurance. There’s this property I know, that to look at, you would think it would be close to half a million pounds. But, there’s a tiny stream that runs in front of it, and in the short time I’ve known it, it’s flooded twice—badly. Someone told me last week it’s on the market for £170,000 because no one will be able to get insurance on it. If you can’t get insurance, then you can’t get a mortgage. It’s an interesting story that illustrates how important home insurance actually is.
Top Tips from the Experts
1) Shop around: ‘Auto renewal is often a good thing, but you can save a lot more by switching insurer. Even if you like the insurer you’re with, there’s no harm in looking on comparison sites and seeing if you can beat their price,’ —Leigh Jackson, senior insurance writer at Money Saving Expert.
2). Get on the phone: ‘If you want to buy your insurance at the very best price, go to comparison websites to find the top quotes and then phone each broker up. Generally, you’ll get the best price over the phone and not over the internet.’—Jason McClean, director, My Property Insurer.
3) Pay upfront: ‘Policies tend to cover you over a two-month span, which you can pay for monthly or upfront. If you do buy insurance on a monthly basis, insurers will often load that with an APR, so buy your insurance upfront if you can afford to.’—Leigh Jackson, senior insurance writer, Money Saving Expert.