By Simon Lambert and This Is Money 17:55 11 May 2012, updated 08:47 15 Aug 2014
There is no getting away from it home insurance is an everyday essential, protecting your property and the things you own in case household disaster strikes.
Many people, however, simply fall into the trap of renewing policies year-in, year-out and see their policy premiums steadily climb – never benefitting from the cost savings of shopping around.
We explain how to get a better and cheaper home insurance deal but still make sure you have the cover you need.
Play it safe: Home insurance helps protect your property and contents in case disaster strikes
Contents vs buildings insurance
Contents and buildings insurance can be held separately or together and just as it says on the tin, the policies protect your possessions and home, respectively.
If you own a property with a mortgage then buildings insurance is essential, as your mortgage lender will require you to hold it. In reality though, whether you have a mortgage or not you should consider it as essential. After all, if your home burns down not having cover will prove an expensive gamble.
If you own a house, buildings insurance is your responsibility, but if you own a leasehold flat it is likely to be the responsibility of the freeholder.
If you rent a property, insuring the building is the landlord’s responsibility and you are normally not expected to pay for it.
Buildings insurance looks after the structure of your home and can also cover other buildings or structures that sit on the land.
The cost of your buildings insurance will depend on the style of your building, its location and most importantly its rebuild cost. This is typically called the sum insured and you should provide it when seeking cover.
Don’t forget, it is not the same as the open market value of your home, aka the house price, which can be much higher.
Checking the sum insured
The Association of British Insurers provides a calculator to check your sum insured, but if your home is in any way unusual, or the values differ sharply, you should get a surveyor to do a proper assessment for you.
When you buy a property, the mortgage lender will usually provide a sum insured that it requires and your surveyor can also provide a figure. Typically this should rise each year, in line with inflation.
Some insurers will offer a standard sum insured with their policy and if you need more than this you can extend it.
Fire, flood, subsidence, lightning storm damage and falling trees or branches, burst pipes, pipe damage and escape of water or oil and vandalism are all things that will usually be covered by a good policy, although there may be some exclusions and not every policy will include accidental damage or bad workmanship.
The insurance will pay out for any problems that hit your home, as long as the insurer agrees that they are covered, and can also include some or all of the cost of housing you elsewhere if you have to move out.
An excess will be imposed on any claims and the size of this usually affects your policy’s price.
- Make sure you are properly protected and not paying over the odds: Use This is Money's home insurance comparison tool to compare home insurance policies
Check the small print: Make sure you are covered for every eventuality. You will need to check under what circumstances you are covered for theft and accidental damage and if there are any limits on personal possessions.
Contents insurance covers what you put in your home, from furniture to your fancy crockery, and can also extend it to the important things you take out of your home, from jewellery to your smartphone and bicycle.
You do not have to have contents insurance, but it is a very good idea to do so. If you are burgled, get hit by fire, or lose a personally important and expensive item, then not taking a big hit to the pocket can soften the blow.
Most policies will pay out for loss but not always damage and a good policy should be able to be extended to cover both, as well as personal possessions that you regularly take out of the home. The best policies replace
items on a new for old basis.
The decision of how much cover to take is yours, but you should jot down what you think it would cost to replace all your belongings – the amount can build up surprisingly quickly.
Policies will often have a standard sum insured and if you want a higher amount you can extend this – expensive items above a certain value may need to be listed individually.
Again an excess will apply and the smaller this is, the higher your premiums will typically be.
How to get cheaper home insurance
Switch rather than just renew
The easiest way to start saving on your home insurance is not to simply take your existing insurer’s quote but to shop around for competing deals.
You can compare quotes using This is Money's partner service, MoneySupermarket which offers one of the largest selection of insurers to make sure you are getting the lowest quote.
Insurance premiums tend to rise year-on-year and even if your insurance was the cheapest deal around when you took it out, the renewal quote may not be the most competitive the next year.
It could be worth trying a couple of different comparison sites to cover all bases but make sure to check Aviva and Direct Line separately as they do not list their prices on any comparison websites.
Reduce your costs and risk
When it comes to cutting your insurance premiums there are some steps you can take. Checking your buildings insurance sum insured is wise. It could be far too high and if so then you could reduce it and save money.
However, you must never skimp on this or artificially lower it, as you may be breaking your mortgage terms and will find yourself underinsured if disaster strikes.
Similarly, understating your contents value is a mistake, as you will lose out in the case of theft, loss or damage.
It is possible to reduce your contents insurance costs by lowering your risk. Moves such as joining a Neighbourhood Watch scheme, fitting better locks, having a burglar alarm installed and getting better smoke alarms can all reduce premiums.
Get a no claims discount
Many of us are familiar with the concept of the no claims discount from our car insurance, where a history of not making a claim is one of the most cost effective ways of reducing your premiums.
This is a growing feature of home insurance too. Typically householders have been asked whether they have made a claim over a set period of time in the past and not having done so means they don’t get a higher premium quote.
However, some insurers are also now making no claims discount-style offers that take this idea a step further. This means that if you do not make a claim you will benefit and see your premiums stay the same and is an option well worth investigating.
Remember cheaper is not always better
When hunting for home insurance it is vital to remember that while obviously you want to keep costs down, you also need the best cover possible.
We cannot predict the future and while you may think you and your home are a low risk and therefore do not need a high level of cover, any number of home disasters could befall you and you may end up heavily out-of-pocket by skimping on insurance.
When comparing home insurance sit down and think about the features you need and what you want to protect, it’s always good to think of the worst case scenario and plan for it.
A little bit extra on premiums will cost far less than a very expensive bill for your buildings or contents not being covered properly.
Always make sure you read the small print and exclusions on policies and compare like with like.
It also makes sense to take a good look at the extras that an insurer is offering you, such as helpful added services, or the opportunity to keep premiums low in the future.
When you get policy documents read through them carefully and make sure all details are correct and everything you need is covered, then if the worst happens at least you should be prepared.
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