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House
Insurance Explained
With Tips and Tricks On How To Reduce Your Costs!!
Do I
Need Household Insurance?
Although
not compulsory, if you own your own home then you
should definitely purchase adequate house buildings
insurance. It can be a huge worry thinking
about a possible loss like fire or storm damage to
the premises. It's also advisable to insure
your contents and again not compulsory, but could
you replace the items easily in the event of a major
loss.
Because it's not compulsory there are still a lot of
people who's thinking is 'bad things will never
happen to me, but stats say otherwise. One in
three of us will get burgled at some point in our
lives, with weather conditions becoming more
unpredictable, can you afford to be without adequate
cover.
Cover on policies will include - storm and flood
damage, fire, smoke and explosions, burst pipes and
other incidents of water leakage, vandalism and
third party damage, alternative accommodation if
your home is uninhabitable, you can also extend the
policies to include accidental damage cover and
legal expenses cover.
If the property is owned on a mortgage then you will
probably find that your mortgagees will insist on
having insurance as they will have a financial
interest in the property.
What
Exactly Do I Need To Cover?
Buildings. If you don't own the
property then you will not be responsible for
insuring the property. If you do own the
property then you will need to insure the buildings
for it's full rebuilding cost. This will
include permanent fixtures and fittings like fitted
kitchens and bathroom suites, any outbuildings,
garages, drives patios, fences, gates, swimming
pools, fixed fuel tanks and underground pipes and
cables for which you are legally responsible.
You also need to add on additional costs for debris
removal and architects fees.
 Contents. Contents cover comprises
basically any item that you would take away with you
if you moved house. You should got through
every room in your home and add up what it would
cost to replace everything with an equivalent new
item. This will include carpets, furniture,
cupboards, items inside cupboards, clothing, and
contents of garages and sheds
All our policies are 'New for Old' cover, which
means if the event of a claim you will be paid out
for an equivalent new item. If you are on or
have been quoted an 'Indemnity' based policy, do not
take it out, it's such an inferior policy to a 'New
for Old policy and it wont be any cheaper.
Personal Possessions. If you have any
contents items which you wish to insure whilst taken
away from the property, then you can extend your
policy to include contents away from the property.
You can have unspecified personal possessions which
will give you a set amount of cover, say £2,000 with
a single article limit of normally £1,000 - £1,500.
For items more expensive than this you may need to
specify the individual items, and valuations may be
required.
How
Do I Calculate How Much Cover I Require?
Buildings. You don't insure for
the current market value of the property. You
insure for the full rebuilding cost of the property,
which is generally a lot lower than the 'for sale'
price. You don't have to take in to account
the land, but you do need to add costs for debris
removal and architects and professional fees.
If you have a mortgage then you will find the
rebuilding cost of the property in any valuation
report or survey. You may want to get a
surveyor in to advise you on the rebuilding costs,
an insurance broker or company are not aloud to tell
you what to insure for although they may be able to
advise you on how you can work out the rebuilding
costs. The Association of British Insurers
offer useful advice and information, they will also
tell you how to work out the rebuilding cost of your
house.
Contents. Your contents should be based
on what it will cost to replace your items at
today's prices.
Should I Take Inflation Into Account?
Although you should ensure the sums insured
represent their full value, most insurers will
have the policy 'indexed linked' which means your
sums insured will automatically increase depending
on the House Rebuilding Cost Index and at the
renewal of the policy will be priced based on the
new sums insured. If you add an extension to
the property then you may need to ensure the
rebuilding costs overall are still adequate.
Contents will increase based on the General Index of
Retail Prices.
How To Obtain House Insurance Cover.
There are more and more ways of obtaining household insurance,
through an insurance broker, directly with an insurance company,
through online comparison sites, even through a supermarket,
but which is the best way to obtain insurance?
 By going directly to
an insurance company like Norwich Union Direct or Direct Line
for example, they say they can reduce costs by cutting out the
the middleman, this may save them on small costs, but they must
spend much more on direct marketing to the public, also they can
only ever quote themselves so in most instances they are not going to be the
cheapest option anyway.
Comparison or aggregator sites work in a similar way to
insurance brokers in the fact that they compare quotes through a
panel of insurance companies. That's about where the
similarities end. With comparison sites you are responsible that
the information you input is correct. The sites check for the
cheapest policies, but the cheapest policies often have
inadequate cover, policy restrictions like security requirements
or maybe have a much higher excess in the event of a claim, these sites will not tell you about these clauses, it
is basically down to you to ensure the policy is adequate, most
times you wont know about these restrictions until you come to
make a claim and suddenly you find you're not paid out for it..
Insurance brokers will search a large panel of selected
insurance companies and although they will look to find the
cheapest policy for you, they will explain any restrictions a
policy may have like full policy excesses etc or clauses to
ensure you are aware of them and that the policy quoted is right
for your needs as a home owner. If you have any problems or
need to make a claim you can speak to someone in the UK and a
broker will be able to provide you with advice on mid-term
changes or claims. At the renewal time they will also
automatically search the market again for you to ensure your
current insurers are still the most suitable option for you.
A direct company or aggregator site will not provide this level
of service.
So we advise, use
an insurance broker!
Tips On
How To Reduce Prices & Have Adequate Insurance Cover
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Buildings & Contents Together. By
adding the buildings and the contents all to one
policies most insurers will give up to 10%
discount. Also in the event of a claim you
only have one insurer to deal with and you wont
have different insurers saying they aren't
responsible for this and that.
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Sums Insured. Although you should make
sure that the sums insured are adequate, don't
completely over insure the buildings and
contents. A lot of policies will give you
automatic cover up to a set limit, although a
lot of these policies are very good, make sure
you are not being overcharged for the privilege.
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Accidental Damage Cover. If you are
clumsy or have kids then having this cover may
be a benefit. You pay a bit extra for the
cover, but in the event you accidentally damage
something you will be paid out for it.
This is where the majority of small claims
occur, but if you think you are careful enough,
don't include the cover, some insurers will
automatically include this cover without even
telling you that it's extra.
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Security. By having modern locks on
doors and having key operated window locks you
may get a small discount. However some
insurers may refuse a claim if say you are
broken into and a window lock was not locked, so
check before accepting a discount for this.
Your best bet is to add smoke detectors and
become a member of a neighbourhood watch scheme
and up to 10% discounts are available for these
additions.
If you are going to install an alarm system you
should go for a NACOSS approved system as these
are the one's which are recognised for discounts
by insurers, again though make sure the insurers
don't penalise you if it is switched off and you
have a theft at the property.
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Working From Home. If you work or run
a business from home make sure your cover is
adequate. Most insurers will not insure you
under a household policy, you will probably
require a working from home policy.
Private house insurance policies exclude
business contents, and public liability for the
business, including customers coming to the
house. Get a Working From Home policy.
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No Claims Bonus. Most insurers will
give large discounts for not making claims, so
for smaller losses you will probably find it's
better not to claim. You will also normally have
a minimum £50 excess on the policy.
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Pay Annually. To save costs and if you
can afford it, pay outright for your annual
insurance policy. Insurers will charge up
to 15% extra a year for spreading your payments
over the year.
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