Home insurance (buildings and contents)

Home insurance

Purchasing your home is one of the single biggest expenses you will make in your lifetime, therefore keeping hold of your home is extremly important. Insurance provides this protection, and the most common insurance people are aware of is home insurance. However, thought should be given to protect oneself against loss of life, critical illness, mortgage payment protection as well.

Home insurance consists of a number of seperate individual insurance products:-

• Buildings insurance
• Contents insurance
• Personal possessions cover

Buildings insurance

Buildings insurance provides cover against fire, floods or subsidence, damage to fixtures and fittings such as kitchens, bathroom sanitory ware, as well as garages, sheds or greenhouses which are usually included as standard.

Your mortgage lender will insist that buildings insurance is in place before and throughout a mortgage term. This is to ensure that their security (the property) remains adequately insured.

A policy should have a sum assured figure to cover complete rebuilding of your home in the event of it being totally destroyed or damaged. Some policies only cover market value, so be sure to check. The policy could also provide you with alternative accommodation if your home is uninhabitable. Be sure to not simply opt for the cheapest building insurance quote available, it is more important think about your needs and the needs of your family.

Contents insurance

Contents insurance provides cover for anything that is not a fixed part of your home. For example your appliances, electronic goods, furniture and clothing; up to a maximum amount your insurer says they will pay, which is the sum assured figure. They may also pay a maximum amount on single items, and there may be a cap for high risk valuables such as TV's, DVD recorders, Games consoles etc. Most home contents insurance policies will even cover the contents of your fridge and freezer and cash in the home.

The cheapest contents insurance available is indemnity insurance, which will replace, for example, a five-year-old carpet with one of the same age. A more expensive option is the ‘new for old’ policy that replaces the old carpet with a brand new one.

As with buildings insurance, you will be covered for fire, storms and floods, explosions as well as theft and vandalism.

Policies can also include cover in the event of an injury in your home. Furthermore, some contents insurance policies would also cover you for legal liability if someone were injured in your home due to your negligence or lack of upkeep of the property.

What is not covered

You will need to tell your insurer if you extend your property, for example with a loft conversion or conservatory as this is likely to increase the rebuild cost. Some insurance providers have maximum cover for single valuable items you may need to specify expensive items such as jewelery, cameras etc as personal possessions. Your cover is likely to be affected or cancelled if you leave your home empty for a long period of time, or if you let it out.

Personal possessions cover

Where you have specific items of value or where you take items away from the home, then you will require personal possessions cover. You should inform the insurer of any items having a value over the single item sum assured figure typically £1000. Items you would usually have this seperate cover for include but not limited to the following: -

• Jewelery
• Cameras
• Pedal cycles (above max value)
• Tools

Tips to reduce premiums

Reduce your premium by implementing effective security measures and reduce your risk of making a claim.

• Change the locks – If you’ve moved to a new home you never know who might still have a key. It is important to maintain locks. Five-lever mortise locks are recommended for external doors while windows should ideally have two bolt locks.
• Install a good home security system - Sometimes there are alarm systems that might be preferred by an insurer. The NACOSS standard alarm can cut premiums with some companies by 7.5%.
• Time-switch lights – Your home is more vulnerable to theft when you are not around. Time-switch lights will give the impression that you are at home.
• If you are away – Remember to cancel newspaper and milk deliveries and ask someone you can trust to open and close the curtains and collect mail.
• Keys – Don’t leave them in obvious places such as under a doormat. Also beware of ‘hook n crook’ thefts – where keys are left so close to a door that a burglar can simply hook them through a letterbox and open the door.
• Install security lighting – illuminate your visitors for their safety as well as your own. Unwelcome visitors are less likely to loiter if they’re ‘in the spotlight’.
• Join a neighbourhood watch campaign – this can help to reduce your premium if you inform the home insurance company of your participation in a scheme. It can reduce your premiums by up to 5%.
• Avoid frozen and burst pipes – If you think pipes are frozen, turn off water at the valve and header tank to cut down the water that can escape.
• Look out for subsidence – One of the most common problems to affect the home but usually covered in your building insurance policy. Look to see the excess level on subsidence and if your garden walls are covered.
• Fire – Fit a smoke alarm and take simple steps to avoid accidents. Most fires in the home are caused by smoking or cooking; never smoke in bed, don’t leave cigarettes lying around and don’t leave cooking unattended. Other fire tips include closing doors at night to contain fires, check the home is safe before going to bed and keep matches away from children.
• Don’t smoke – As covered above, the fire risk greatly increases if you smoke cigarettes. Most insurers will now ask if you are a smoker.
• Increase your voluntary excess – The amount of excess is the money you are willing to pay on claims. So, for example, if you had a £50 excess and a £100 claim you would pay half and the insurer the other half. The higher the excess you are willing to pay, the lower your premium. This can be as much as 20% with some companies for as little as £250 excess.
• Think about your cover – Do you really need accidental damage cover? This can increase premiums by 25%. Think carefully about the add-ons you need.
• Don’t claim unless you need to – The fewer the claims, the higher your no claims discount. So for minor issues that would be inexpensive for you to cover with your own cash, think twice before making a claim.