You may have mastered the basics of home insurance. But are you confident you can get the right cover at the right price?
Homeowners need buildings cover, but contents is for everyone
The type of cover you need to buy depends on whether you rent or you own your home. Homeowners and landlords usually need both buildings (in fact, it's often a condition of your mortgage agreement) and contents cover, while those who rent typically only need contents cover.
If you need both building and contents cover buying combined insurance can be cheaper, but it's not without its pitfalls. For instance, some insurers - Co-op, Hastings and Tesco, to name a few - will have a separate excess for both parts of your policy.
This means a claim affecting both the structure of your home and its contents, such as a flood, will result in a double deduction. But if you decide to buy two separate policies and you need to claim, there may be arguments between your two providers over who should cover what. It is rare but it is possible.
Don't over-cover buildings - rebuild value is what counts
For buildings, a common mistake is to cover the home's market value (the amount it might sell for), instead of the rebuild value - the cost of rebuilding the property if it was knocked down. The key is the cost of materials, labour and architects for your area. However, buildings policies should also cover the cost of somewhere for you to stay while your home's rebuilt or is uninhabitable.
To find a rebuild value, commissioning a survey is most reliable, but it's expensive unless you're getting one anyway (eg, if you're buying a new home). A less accurate, but quicker option is the Association of British Insurers' calculator.
Don't under-cover contents - your claim may be cut
For contents, under-insuring could lead to you getting less than the value of your items if you need when you claim. Add up everything, including smaller items such as clothes, on a 'new-for-old' basis. (See new for old for more.) For example, if you insure £20,000 of possessions when you actually have £40,000, and you need to make a claim, then you'll only have 50% of your contents protected.
Quick questions
How do I calculate the value of my contents?
What happens if I fail to get the correct cover?
Better locks pay for themselves
Don't know your five-lever mortise deadlock from your rim automatic deadlatch? Well you should, as getting the right lock on your doors could massively lower your contents premium. Insurers ask what type of lock you have, so you risk invalidating your cover if you put down the wrong type.
Quick questions
What are the main types of lock?
Which lock is best?
How do locks affect my rates?
Help! I don't know which type of lock I have
Tweak your excess to lower your premium
Home insurance policies come with a compulsory excess (the amount you have to pay towards any claim - see excesses for more). If you have an excess of £100, but make a claim for damaged or stolen goods worth £400, your insurer will give you £300.
You can also choose to pay a voluntary excess on top, which will bring the cost of your premium down. The more you pay, the lower your premium will be. You need to be realistic, though. Make sure the total excess is affordable, in case you do have to make a claim.
Beware monthly repayments, they're really a loan
Pay-monthly options are essentially high-interest loans.
Either pay your premium in full, or if you can't afford to, use a credit card with a low APR (or better, a 0% credit card for spending, ensuring your repayments are large enough to clear it within a year).
Homeowners need buildings cover, but contents is for everyone
The type of cover you need to buy depends on whether you rent or you own your home. Homeowners and landlords usually need both buildings (in fact, it's often a condition of your mortgage agreement) and contents cover, while those who rent typically only need contents cover.
If you need both building and contents cover buying combined insurance can be cheaper, but it's not without its pitfalls. For instance, some insurers - Co-op, Hastings and Tesco, to name a few - will have a separate excess for both parts of your policy.
This means a claim affecting both the structure of your home and its contents, such as a flood, will result in a double deduction. But if you decide to buy two separate policies and you need to claim, there may be arguments between your two providers over who should cover what. It is rare but it is possible.
Don't over-cover buildings - rebuild value is what counts
For buildings, a common mistake is to cover the home's market value (the amount it might sell for), instead of the rebuild value - the cost of rebuilding the property if it was knocked down. The key is the cost of materials, labour and architects for your area. However, buildings policies should also cover the cost of somewhere for you to stay while your home's rebuilt or is uninhabitable.
To find a rebuild value, commissioning a survey is most reliable, but it's expensive unless you're getting one anyway (eg, if you're buying a new home). A less accurate, but quicker option is the Association of British Insurers' calculator.
Don't under-cover contents - your claim may be cut
For contents, under-insuring could lead to you getting less than the value of your items if you need when you claim. Add up everything, including smaller items such as clothes, on a 'new-for-old' basis. (See new for old for more.) For example, if you insure £20,000 of possessions when you actually have £40,000, and you need to make a claim, then you'll only have 50% of your contents protected.
Quick questions
How do I calculate the value of my contents?
What happens if I fail to get the correct cover?
Better locks pay for themselves
Don't know your five-lever mortise deadlock from your rim automatic deadlatch? Well you should, as getting the right lock on your doors could massively lower your contents premium. Insurers ask what type of lock you have, so you risk invalidating your cover if you put down the wrong type.
Quick questions
What are the main types of lock?
Which lock is best?
How do locks affect my rates?
Help! I don't know which type of lock I have
Tweak your excess to lower your premium
Home insurance policies come with a compulsory excess (the amount you have to pay towards any claim - see excesses for more). If you have an excess of £100, but make a claim for damaged or stolen goods worth £400, your insurer will give you £300.
You can also choose to pay a voluntary excess on top, which will bring the cost of your premium down. The more you pay, the lower your premium will be. You need to be realistic, though. Make sure the total excess is affordable, in case you do have to make a claim.
Beware monthly repayments, they're really a loan
Pay-monthly options are essentially high-interest loans.
Either pay your premium in full, or if you can't afford to, use a credit card with a low APR (or better, a 0% credit card for spending, ensuring your repayments are large enough to clear it within a year).
