Know What You’re Buying
“It doesn't matter whether you live in a one-bedroom flat or a five-bedroom detached house, it's important to ensure you have the right protection in place in case something should go wrong,” says Kevin Pratt from Money Supermarket. The most important thing to recognise at the beginning of the process is that home insurance is made up of two parts: buildings and contents. “You don't just need to insure the structure of your home; you also need to insure its contents against loss or damage caused by theft, fire, storms, lightning, flooding or other water leakage, as well as explosions or earthquakes,” adds Kevin.
Get Buildings Insurance First
“If you're a homeowner, then you're going to need buildings insurance,” says Tom Vaughan at Confused.com. It protects the structure of your home – including the roof, walls and windows – from events such as a fire or a falling tree, as well as other permanent fixtures inside the home, such as fitted kitchens and bathroom suites. Although not compulsory, it’s worth noting that most mortgage lenders will insist that you have adequate protection. The good news is you don’t need to provide any real documentation at the time of purchase, just some basic facts about your home, such as when it was built, how many rooms it has and what the walls are made from. Later down the line, a provider might ask you to calculate the rebuild cost of your home, which can be done using the Building Cost Information Service’s (BCIS) house rebuilding cost calculator. If you’re still in the process of buying a home, it’s good practice to have buildings cover in place when you exchange contracts, as this is the point at which you become financially responsible for the property.
Take Care With Unusual Homes
Most homes in the UK have brick walls and a tile roof, but others are more unusual. “If your house is not of a standard construction, you will probably need specialist home insurance because a mainstream insurer will most likely refuse cover,” warns Kevin. The good news is most insurers agree on a common list of property styles which are defined as non-standard, including homes with a timber frame and flat roof.
Count The Contents
The average home has more valuables than you might think, with Money Supermarket putting the value at somewhere in the region of £55,000 for a normal family of four – despite far lower estimates from its customers. “It's important to get the figure right so that your insurance will pay out in the event of a claim,” warns Kevin. “Walk round your house and make an inventory of your possessions – jewellery, computers, iPods – they can all add up to quite a sum. And don't forget the contents of your shed. Contents also include clothes, furniture, carpets and curtains,” advises Kevin. Read the terms and conditions as most insurers will limit pay outs for single items, and be sure to provide your insurer with all the relevant information – which might include professional valuations for items like jewellery. Skipping this step might allow your insurer to refuse to pay out.
Define The Cover
The contents portion of home insurance policies are generally referred to what’s known as ‘old for new’, which means a successful claim will pay out to replace the old item with a new version, in the right circumstances. Be careful if your insurer is offering a cheaper ‘indemnity’ policy offer to protect against everyday wear and tear. The eventual pay-out will only reflect the asset’s value at the time of the claim, rather than its value when new.
Check The Excess
Official advice from the Money & Pensions Service recommends shoppers put the level and type of cover before the overall price. Once you’re happy the policy is right for you, it’s always important to check the excess to ensure you’re getting the deal you think you are. “Generally, a higher insurance excess can knock pounds off your premium. This is useful if you don't need to claim for low amounts, as doing so is likely to increase the cost of your insurance in future,” says Neil. “Escape of water is a common claim, but the excess is not always the same as in the main section of your policy. So double check and ensure your excess for this is affordable.”
Consider The Add-Ons
It’s common for insurers to offer extra forms of cover, usually for an additional premium. Accidental damage is one of the most popular policy add-ons, as are legal expenses and even car insurance if you park on a private driveway. Also, check what the policy says about loss of items outside of the home – a common umbrella term is “personal possessions” – such as mobile phones, laptops or expensive headphones. It may be that the distance is limited to a certain square mileage, or not included at all.
Track The No Claims Discount
The no claims discount works the same way it does for car insurance. If you don’t make a claim during a 12-month period then your insurance provider could consider giving you a reduced premium next time round. However, other circumstances are taken into account at the time of renewal, so there aren’t any guarantees. Be sure to still shop around.
Finally, Always Beware Common Exclusions
Most insurers tend not to automatically pay out for damage due to wear and tear, as well as ‘acts of war’ or terrorism. Neither is it ‘boiler-plate’ for policies to protect against pest infestations, faulty or poor workmanship by contractors, or even frost damage. “If your home is unoccupied for more than 30 days during the year, you could also invalidate the policy,” warns Kevin. “Always read the small print before you buy insurance to make sure you have the right cover for your needs.”
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