Home insurance is one of those things you hope to never claim on, but if disaster strikes it can be worth its weight in gold. There are around 6.5 million homes that are under-insured, and It might not be a subject that plays on your mind every day but, whether you’re buying home insurance for the first time or due for a renewal on your existing policy, ticking off some pointers could make your life easier (and cheaper!)
1. Shop around
Do your research, shop around and compare prices. Mortgage providers often try to push borrowers to take out their home insurance however, despite cover being a condition of your mortgage, it doesn’t mean you need to buy it from your provider.
2. There are two types
Buildings insurance – covers the structure of your home, includes permanent fixtures such as kitchen units and bathroom suites. It does not cover the contents of your home.
Contents insurance – covers all manoeuvrable items in your home i.e. furniture, electrical goods, pictures.
Need both? Many insurers offer discounts for combined buildings and contents policies.
3. If you own your home – buildings insurance is essential
Buildings insurance will be a condition of your mortgage agreement. Remember, if you are purchasing a property to have buildings insurance in place from the date you exchange contracts and NOT the day of completion.
4. And if you don’t own your home – you don’t need buildings insurance
If you’re living in a rented property, it is the landlords’ responsibility to have buildings insurance in place.
If you live in a flat, it’s the entire building that needs to be insured. If you own a share of the freehold, it’s up to you and the other shareholders to arrange buildings cover.
5. Replacement cost of actual cash value?
You can choose to insure your home and belongings for either replacement cost or actual cash value. Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. It’s important to insure your home for at least 80% of its replacement value. Actual cash value is the amount it would take to repair or replace damage to your home after depreciation.
6. Insure the rebuild value
The amount of buildings insurance your need is determined by the rebuild value of your home and not the market price. This is good as the rebuild value will most likely be lower!
7. Protect your valuables
If you own valuables such as jewellery, antiques, collections or high-spec electrical items, then these may not be covered under the basic terms of your contents cover. So check with your insurer and take out separate cover if necessary.
8. Consider accidental cover
Remember, accidents can happen – a glass of red wine over the carpet, or a fizzy drink spilt on the tv, these things can happen. You may think you’ll be covered on your home insurance, but you won’t necessarily. Accidental damage cover can be added to your contents policy.
9. What excess can you afford?
The same as with car insurance, most home insurance policies come with a compulsory and voluntary excess, and choosing to pay a higher voluntary excess can bring down the cost of cover.
10. Review your home insurance every year
Check with our insurer every year to ensure your policy provides adequate coverage. Also, don’t automatically renew with your existing provider, you could save yourself money finding a better deal elsewhere!
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