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5 common home insurance mistakes

home insurance

There are a number of common mistakes that homeowners can make when it comes to their home insurance policy. With so many options and a huge amount of policy providers, homeowners need to navigate a lot to get their perfect policy. Here are some common mistakes to avoid.

  1. Choose a plan that works for you

Home insurance policies shouldn’t be considered a cookie cutter solution. Homeowners’ needs can be different depending on a number of different circumstances. Many people search for the first insurance policy they find and sign up, without taking into account their own circumstances. Take a look at your house, location and current situation and try to find a policy that best covers what is essential to you.

  1. Find out about discounts

Searching the internet for insurance is one thing, but that shouldn’t be where the search ends. A policy provider may have a number of discounts on offer, either seasonal sales or little things you can do around your house that keep your premiums down.

  1. Know your plan

In the moment that something happens, it’s best to know your policy as thoroughly as you can. It saves time before you make a claim and can calm any worries in the moment. Know the basic principles of what is covered and any extras you might have added in, and making a claim can be a much simpler process.

  1. Over or under-valuation

Don’t underestimate your contents, but also make sure not to overestimate them. Either way it can make your insurance policy ineffective for your home. If you undervalue what is in your home you may not be fully covered for them which can be a significant problem if you need to make a claim. Make sure you take into account items such as important or expensive jewellery and things such as works of art of musical instruments. Make sure the items are valued regularly so that you always have an up-to-date and accurate account of what is in your home.

  1. Not updating your policy

If your situation changes, make sure your home insurance policy does too. If you decide to sub-let or to rent out the house, your policy will need a significant adaptation. Even changes in your work life can affect your home insurance policy – if you run a business from home then a claim on your policy may be rejected. Depending on your business there might be other policies that suit your situation better.

Home insurance warning

Home insurance policy holders are being warned that the cover might be invalid unless they abide by the rules.

A number of cases have come to light where home insurance policy holders have been caught out and risk having to foot large bills themselves.

One of the main reasons for invalidated home insurance is faulty smoke detectors. It is the home owners’ responsibility to check that the detector is in full working order. If it transpires that it wasn’t working and a fire was not detected, then the claim could be refused. Therefore, home owners are advised to ensure that they test their detector at least once a month.

Another way that home owners fall foul of the rules is by either renting out their whole house, or even renting out just a room. Both actions, if the insurance company is not informed, could invalidate a policy.

Industry experts point out that the majority of insurers will not cover a home, or room being rented to a third party. That in their eyes is a higher form of risk and is not covered within the average policy.

Then there’s the question of security. If you make a claim for items stolen from your home and it turns out that you left a window open, failed to lock a door, or have not reported the break-in within 24 hours, then you could be refused compensation. What’s more, should you have advertised your absence on your social media platforms – insurance companies do occasionally check their client’s online update – then you could be regarded as being negligent and your claim invalid.

It is also very important to get a crime number as most insurance companies require that before they process a claim.

DIY fans should also be aware, because most home insurance policies will not cover accidents to you, or your home, which will be regarded as outside the policy.

Finally, for those travelling for business, or pleasure, many home insurance companies only allow people to be away in a single period for around 30 days; any more than that and they could say that the house is empty and vulnerable to a break-in, or pipe-burst etc.

As always, home insurance users are advised to check carefully the small print.

Home Insurance Costs on the Rise

Its reckoned that home insurance costs have risen over 3% in just the last three months.

It’s all down to the recent bad weather that the UK has been experiencing since the start of the new year, with storm after storm battering the country. And the home insurance companies have had to pass on some of the rising costs of storm damage to their customers. It also reflects the rise in Insurance Premium Tax (IPT), which went from 6% to 9% last November.

IPT is paid by the insurance industry to the Government and insurance companies, and the rising level of this industry tax is driving the increase in premiums. The insurance industry is uncertain whether Chancellor George Osborne will further increase the IPT come the budget, but if he does, then this will likely affect customer premiums again.

The Association of British Insurers hopes that the Chancellor will keep his hands off an attractive way of raising money. It will already raise £8 billion for the treasury.

A spokesperson told the media: “IPT should not be seen as a soft touch tax to raise revenue as any increase leads to a further financial squeeze on millions of households and businesses who have done the right thing and taken out insurance.”

Its reckoned that the IPT effect has actually reduced a regular fall in home insurance premiums over the last few years. Figures suggest that current premiums are almost 10% lower than in 2014, but not for long.

It’s also been revealed that home insurance is the least likely to pay out when compared to say travel insurance and car insurance claims. Whereas they enjoy 87% and 99% pay-out rates respectively, one in five of home insurance policies are not paid out. The reasons for this are varied, but mostly it comes down to the complexity of many policies and the lack of maintenance to many properties, which makes the policy often void.

Home Insurance Companies Worry About Airbnb

Home insurance companies are warning those that use their property as an Airbnb residence that they could be invalidating their cover.

Anyone taking out a home insurance policy must tell their provider if they are using their property as a commercial venture. But, this very basic principle is being flaunted by many who act as Airbnb hosts and take in paying guests.

Not only will they be unlikely to make a claim should their guests damage the property, or belongings, but other claims not associated with guests could be regarded as invalid because the policy holder was not honest when the insurance was taken out.

Airbnb has launched a scheme to act as a top-up for existing policies – an insurance against insurance being paid out – but this is seen as expensive, will only pay out when the lead insurer has refused and carries a large excess (in the region of £1,000). They also point out that it does not cover high-value items, nor does it cover most valuables.

Most insurance companies are holding to the principle that if a person accepts paying guests, then they should take out a business policy, and not domestic cover. Experts point out that this might even extend to people who have long term lodgers.

One expert in the industry said that many home insurance companies would be sympathetic to be trying arrange cover for occasional paying guest, but that they should always be informed of the fact. They said that honesty was always the best policy, because the risks were too great and that it’s not only the damage which might be caused during one particular incident, but it might also invalidate a more general claim. The problem for many owners, was whether the extra money made by renting their property would compensate for a higher insurance premium and the added paperwork involved.

Home Insurance Industry Knows About Darkness

Night time garden

When it comes to the autumn and the night’s drawing in, the home insurance industry braces itself for an increased level of claims.

Home insurance exports know that opportunistic thieves love the darker nights, because it allows then to make off with people’s goods without being seen so easily. And one of the most visited targets is the garden.

Recent research by one leading insurance company revealed that nearly 40% of its customers had had something from their garden taken. Top items for thieves are garden furniture, barbeques, water features and plants (including trees).

The age-group that suffers most from thefts of this sort are ironically aged between 18 and 34, whereas the over 50s (who spend the most on their outdoor space and are ‘garden proud’), suffer least. Not only do they realise the investment required to sustain a garden, but they also are more conscientious and lock things away at night and when they are away.

The amount involved, in terms of valuables being stolen, averages £200.

Also, most thefts take place in London (nearly 60%) and the least number happen in the South West (around 25%).

And perhaps more disturbingly, opportunistic thieves can often use a garden theft to scope out the potential for a more serious theft. Thieves are always on the look-out for unlocked windows and doors, in order to mount a quick run and grab.