Home insurance quotes vary massively from insurer to insurer – even for the same house. Making sure you compare home insurance quotes from different companies can help find the policy you need for the lowest cost. Not all home insurance is created equal, however, so it’s important to check not just the price but also that your chosen insurer provides the cover you need. So, join us as we take a deep dive into the world of home insurance and help you get the best possible deal.
What home insurance cover do you really need? Buildings, contents, or both?
The term ‘home insurance’ covers two distinct kinds of policy: buildings insurance, and contents insurance. Buildings insurance covers the actual building and any permanent fixtures or sittings. If, for example, your home is destroyed by an earthquake it is this policy that will pay for it to be repaired/rebuilt. Kitchens, bathrooms, and fitted bedrooms will be covered as part of the buildings insurance, because they are a permanent part of the building and not something you take with you when you move.
Contents cover, on the other hand, insures your personal belongings; paying to replace all the things inside your home that were destroyed when our hypothetical earthquake knocked it down. Clothes, most furniture, TVs, computers, and carpets all count as ‘contents’. In simple terms, if you can pick it up and take it with you when you move house, then it’s covered by your contents insurance, not your buildings insurance.
If you own your own home, then you will need both buildings and contents insurance. If you have a mortgage, it’s usually a condition of your contract that you have up to date buildings insurance. Tenants, however, will usually only need contents insurance; buildings insurance is the landlord’s responsibility.
Essentials and Extras
One of the challenges of choosing home insurance is that not all policies are the same. Not only do you need to make sure you’re comparing like with like when it comes to price, it’s vital to check that you’re taking out cover that actually meets your needs. Some policies come loaded with extras, and you may be able to save by stripping out elements that you do not need. More important, though, is to check that you’re choosing home insurance that covers you for the things you do need.
Check the exclusions
Insurance companies are businesses and need to make a profit. Part of an insurance companies profits come from setting the premiums they charge, but part also comes from reducing what they have to pay out for claims. To that end, as well as to keep down home insurance quotes for the majority who live in low-risk properties, insurers are adding more and more exclusions to their policies.
Exclusions are specific events which, if they happen, your insurance will not cover and you may be surprised about what your insurer isn’t prepared to pay out for; so it’s vital to check carefully. Some common pitfalls include:
– Personal belongings cover: items which you take outside of your home aren’t usually covered. Increasingly, this is likely to include high-value items like iPads, laptops, and smartphones.
– Accidental damage cover: fewer than 1 in 5 insurance policies cover accidental damage you cause yourself; if you’re a bit of a clutz, or you simply couldn’t afford to replace your smartphone if you drop it, then finding a policy that does cover accidental damage could be well worth it.
– Home emergencies: again, fewer than one in five home insurance quotes will include this, and many don’t offer it at all.
The Excess Cover of your Home Insurance
It is very important to check the excess for your policy. An excess is the amount you are required to pay yourself towards the value of any claim. Many policies have a minimum excess – often around £100 – but opting for a higher excess can reduce your premium. That said, opting for a higher excess to reduce your premium can be risky unless you are certain you’d be able to pay that amount if you had to claim; there’s no point in an insurance policy with a £1,000 excess if you don’t have £1,000!
How much home insurance do you need?
The amount the insurer charges you for your home insurance policy is based on the amount they might have to pay out if you ever claim. In general, the more your house, and its contents, are worth the more you will have to pay for your home insurance. That said, it is very important to make sure that you pay for the right amount of insurance for you. If you’re paying for more than you need, you’re not getting value for money. If, however, you’re under-insured, then you’re in for a nasty shock if ever you need to make a claim.
Types of contents insurance, and choosing the right level of cover.
Insurers generally use three different methods to calculate the level of contents cover:
– Bedroom rated – where the insurer works out the sum insured based on the number of bedrooms in your house. This is useful because you don’t have to work out the value of all of your belongings, but it’s important to ensure that the sum the policy covers really would be enough to replace everything you own.
– Sum insured – where you pay for a specific amount of insurance based on the value of your home’s contents. This does mean, though, that you have to work out as accurately as possible how much your belongings are worth.
– Unlimited sum insured – does what it says on the tin, but because the insurer doesn’t know the maximum value they might have to pay in the event of a claim is likely to be the most expensive option.
You can decide which of these options you prefer; however, if you use a price comparison website, it’s worth noting that you will probably only be able to use the ‘sum insured’ option.
Most contents policies have a maximum value for any single item which they will pay out in the event of a claim. Often, this is roughly £1,500. If you have any belongings which are worth more than this – such as jewellery, or a computer, tell your insurer. You will likely need to provide proof of purchase (a receipt) showing the value, and pay an additional premium. It is vital to make sure that items like this are listed correctly on your insurance certificate when it arrives, otherwise, your insurer may not pay out if you ever need to make a claim.
Choosing the right level of Buildings Insurance
The guiding principle of buildings insurance is that, if ever the worst should happen, the policy should cover the total cost of rebuilding your home; from scratch. Note that this isn’t the same as the market value of your house, which could be either higher or lower. Although you can work out these costs for yourself, it is really a job for a qualified surveyor.
If you have a mortgage, you will have had a survey done when you took out your loan. If not, then you can either rely on the most recent survey you have – when you bought the house – or get a new assessment if too much time has elapsed. But make absolutely certain that you know how much you need your policy to cover, or you risk genuine catastrophe if you ever need to claim.
Bedrooms vs. Value
As with contents policies, some insurers will work out an estimate for the rebuilding costs of your home based on the number of bedrooms and insure a sum based on that calculation. Other companies will insure the specific value quoted by a surveyor. Which option you choose is up to you, however, even if your insurer doesn’t ask, you still need to know the rebuild cost of your home so that you can ensure you are covered to a high enough level.
The cost of rebuilding your home will increase over time as inflation pushes up prices. For that reason, index-linked insurance policies are the best option as they increase in value in line with inflation and make sure you always have the cover you need.
Where to buy your home insurance
There are a number of different options for you to actually purchase your insurance policy:
– Price Comparison Websites. At least 80% of people use a price comparison site to buy their home insurance. These are useful in allowing you to quickly compare quotes from many different companies, and also see reviews from existing customers. Not all insurers appear on every price comparison site, so it’s important to check more than one.
– Other insurers. Some insurers don’t allow their policies to appear on price comparison sites (eg. Direct Line, Aviva, and Zurich) so check directly with these companies as well to make sure you get the best deal.
– Brokers. Especially useful if you need something special – such as you are looking for insurance for a listed building – brokers will do all the hard work for you and find you a policy that meets your specific needs. Many will even represent you in the event of a claim.
– Mortgage Providers. When you take out a mortgage, you will more than likely be offered buildings and contents insurance as part of the package. Don’t accept this right away though, make sure you shop around to see if you can get a better deal elsewhere.
– Other providers. Banks, credit card companies, supermarkets, and even the Post Office offer home insurance policies. Many of these appear on price comparison sights, but it’s well worth keeping your eyes open for deals.
How to reduce the cost of your Home Insurance
There are a few simple things you can do to reduce the cost of your home insurance; as well as some things you should never do, no matter how tempting they may seem.
Adding extra security to your home (locks, security lighting, alarm systems) can help reduce your premium on your home insurance by making break-ins less likely. Smoke and burglar alarms are vital, and a NACOSS approved alarm could reduce your premium significantly (though likely not be enough to cover the cost of the alarm).
No-Claims Discounts for home insurance
If you’ve not claimed for a few years, make sure that your insurer is giving you a no-claims discount. Not every company offers this, so if yours doesn’t you might want to look around for one that does.
Shop Around – every year
Insurance companies are profit-making businesses and they don’t reward customer loyalty. If you’ve been with the same home insurance provider for more than two or three years you’re almost certainly paying over the odds for your home insurance. Shop around at every renewal, and don’t be afraid to play providers off against each other to get lower prices. Remember, have a choice of insurer – make the companies compete for your business!
Don’t lie. Ever.
If you don’t take reasonable care to answer every question you’re asked fully and honestly when you apply for your home insurance policy, and the insurer finds out, they could cancel your policy and not pay out when you need to claim. Worse still, lying on an insurance application is a criminal offence and, if convicted, you would likely find it very hard – and extremely expensive – to obtain any kind of insurance in future.
Don’t put it off until later
Home insurance isn’t exciting, or glamorous, but it is vital. Putting it off until later is the best way to make sure that you end up out of pocket – or worse, homeless – when the unexpected happens. With price comparison websites and online brokers, it’s never been easier to get a great deal on your home insurance, so do it today and make sure your home is well protected at the right price.