Every year when your home insurance renewal arrives it’s tempting to do nothing and let it renew automatically. But don’t. By spending a few minutes online or on the phone you could easily save yourself enough to pay for a decent holiday.
If you unthinkingly renew your home insurance each year over a decade, you could easily end up paying more than £1,000 a year for a policy that you could buy for about £250 with exactly the same if not better cover.
It’s almost unheard of for claims-free people switching insurer not to save money, and the longer it is since you last switched, the more you will save.
Even if you have made a recent claim, you don’t have to accept the new higher premium. Other insurers will often take your business at a lower rate. Just explain what happened and how much it cost to put right.
How to compare policies
The rise of price comparison websites is the main reason that home insurance has come down in price so much over the last decade. For 15 minutes’ work online it is possible to get quotes from hundreds of insurers and find a deal that suits you.
If you are using a site, make sure you are well armed with information. If you want to compare a new policy with an existing one and make sure that it is a fair comparison, have it to hand so you can check the details are the same. Bear in mind, though, that things might have changed. You may have switched jobs or bought an expensive new television. If this is the case, make sure those details are included in the new quote.
What to look for
If you’ve got a mortgage you’ll need insurance that will cover the cost of rebuilding your home if it is badly damaged. The cost of rebuilding is not the same as the value of a home. Most homes will need £250,000 or £400,000 worth of cover depending on the size. You might find the figure on the paperwork for your mortgage. The Association of British Insurers has a calculator here (you need to register to use it). Don’t over-insure. If it will cost £200,000 to rebuild your home, only pay for that much cover.
It is, however, the contents cover where most of the disparities between policies lie. As with financial products, the devil’s in the detail when comparing policies, and the key thing to look at is the amount you’ll get to replace your belongings if they are all lost. If you live alone or in a couple, the basic level – usually about £30,000 – will probably be enough. Most families will need more cover, typically £70,000 or more. If you have valuable items make sure you specify those, and if you have a lot of antiques or paintings consider cover from a specialist.
Next up you need to compare excesses, the amount you have to pay towards the repairs, replacements and so on that you are claiming for. These vary enormously, with the cheapest policies often having the highest excesses. There’s no point in buying a super-cheap policy only to find the excess is so high and the maximum payout so low that it is not worth claiming. Make sure the excess is something you can afford if you do need to make a claim.
Add-ons worth having, and the ones to drop
"Contents outside the home" is one add-on worth buying. It insures your belongings against theft and has long been the cheapest way to insure your bicycles. Some insurers have bike add-ons for about £20 a year, while others include it in the main contents add-on. The same is true of mobiles and laptops. Just check that the cover will pay out and establish any major caveats before you sign up.
Get a decent contents policy and your belongings are covered when you go on holiday, negating the need for travel cover for short trips away.
Note though that home insurers now price according to your no-claims discounts. You’ll need to weigh up whether it is worth claiming if your £40 mobile handset is stolen, as you’ll probably pay more in higher premiums later.
Insurers will offer to add home boiler and plumbing emergency cover for about £60 a year. This will pay to send someone in an emergency, but does not cover parts. When cold spells hit, users can face a long wait for a tradesman provided by the insurer. It might be better to find a good local plumber and keep his number handy.
Accidental damage is another optional extra. Buy this and you can make a claim if you spill paint on the sofa or put your foot through the attic floor. You might be inclined to spend money on this if you have children or pets, but decide to save the money if you are a careful type or do not own things worthy of cover.
Legal expenses cover which will add £25 a year to a typical policy. These can come to your aid if you get into a legal dispute at work, or with a neighbour. You might, however, have similar cover through your employer or through other policies.
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