Household Insurance

Home insurance falls into two categories: contents and buildings. Broadly speaking, buildings insurance covers the structure of your home and any permanent fixtures and fittings, should they be damaged or destroyed and contents can be regarded as all the things that you have in your house which would fall out if you turned it upside down, with the carpets and curtains added on top. Contents insurance can also cover personal liability for possessions outside of the home and may include personal items such as mobile phones and jewellery.

However, as annabel consultant Avril Robertson comments, “this isn’t usually standard, so make it your business to understand the limitations of your policies. Make sure you have everything covered; high value items such as jewellery and art need to be specified on a policy; if they are not, then they are more than likely not covered in full. This will probably involve an additional premium but is worth it for peace of mind.”

Top Tip from annabel consultant, Jen Russell-Smith:

If you are renting, make sure you’ve got the right level of contents insurance to cover any damage to your landlords fixtures and fittings.

Is it cheaper to buy contents and buildings insurance separately or combined?

Many companies offer a discount if you buy the two policies together and it can also make life easier if you have a claim, however do compare with the cost of separate policies as this is not always the case. Combined policies are only appropriate if you own the freehold on your property.

How do you know what value to attach to your contents insurance?

Make an inventory of all your possessions – basically everything that you would take with you if you moved house – and calculate their values using either receipts, the internet and this amazingly handy checklist courtesy of insurance broker Weatherbys Hamilton

Use an app such as Sortly or MyStuff to keep track of everything and remember that the value of each item should be that of replacing it new, not its current value.

For a full valuation of art and other collectables, AXA Art recommend the following valuers Coram James, Gurr Johns and Pall Mall. Don’t forget to check the attic and outbuildings for any forgotten heirlooms!

Tell your insurer of any particularly valuable items to make sure they are covered and remember to inform them if you buy anything valuable after you take out your policy. Many insurers have a single item limit, over which they will not pay out. If this is the case, you may need extra cover for expensive items.

How do you know what value to attach to your buildings insurance?

You should calculate the cost of a complete rebuild – not what you paid for your property or its current market value. You can use the ABI’s (Association of British Insurers) calculator to do this (home rebuild calculator), but if your property is listed or not standard construction, you may need a surveyor to work out the rebuilding cost.

Insurance broker Weatherbys Hamilton advise that the best household insurers try to reduce the risk of underinsurance by providing their clients with a free reinstatement valuation. A surveyor will visit, establish a rebuild figure and once this sum insured has been agreed by both parties, the client will then benefit from Extended Replacement Cost (ERC) cover. This means that, even if a claim exceeds the sum insured, the insurers will pay whatever the cost of reinstatement actually turns out to be. A potentially priceless benefit.

Are devices and gadgets covered by home insurance?

The standard cover included in your contents insurance doesn’t tend to cover much in the way of gadgets being lost, stolen or broken when out of the home, and excess levels are often prohibitive. You can buy an add-on such as an ‘all risks’ or ‘personal possessions’ option to your contents insurance. You can buy a separate ‘gadgets’ policy but these tend to be an expensive and often unnecessary option.

Top Tip from annabel consultant, Annabel Farnsworth:

If you are a Sky customer, Sky Protect Continuous cover two chosen devices plus all Sky equipment in your household​​​​​​. Alternatively, you could consider using a cover-all policy from companies such as Protect Your Bubble. These are particularly good if you have children who are likely to lose - or smash - their phone or if you may not necessarily have the cash to pay upfront for repairs.

Does it really pay to switch provider or negotiate with the current one?

This is interesting. Whilst hunting around for a new policy can be daunting, the FCA (Financial Conduct Authority) estimate that around 6 million policy holders are paying too much for their insurance and that, collectively, they could save £1.2 billion a year if they paid average premium prices.

Use a price comparison website (MoneySavingExpert recommends MoneySupermarket and to test the market and, if you are presented with an unwarranted leap in premium from your current provider or have other cause for dissatisfaction, you may well wish to make a switch.

However, Alec Moore from Weatherbys Hamilton advises some degree of caution when adopting a serial switching approach stating that:

“Looking to make a change every year does not bring out the best in most relationships and insurance is no different. A sensible approach is to test the market every few years to ensure that your policy is competitive and, perhaps more importantly, continues to reflect your requirements.”

Are there any ways to save on the cost of home insurance?

Apart from switching (or negotiating with) providers, there are several ways you can potentially save on home insurance.

  • Check with your insurer whether they offer a discount for certain security devices fitted in the home (eg. burglar alarm and locks).

  • Choose to pay a higher excess to reduce the price of your premium (although this doesn’t always provide value for money)

  • Avoid unnecessary claims by taking measures such as insulating your pipes. Many insurers will offer discounts to customers who haven’t made a recent claim.

  • Don’t leave it till the last minute. MSE’s research shows that by buying your home insurance three weeks before you want it to start can save you 20% or more.

  • Seriously consider using a reputable broker (annabel highly recommends Weatherbys Hamilton for a trusted and personal service) A successful broker knows which insurers are the most appropriate for you and will be able to negotiate the best terms on your behalf. The reassurance of having a professional adviser who can obtain quotations, manage the relationship with the insurer and then be at your side when you need to make a claim, absolutely invaluable.

Top Tip from annabel consultant, Avril Robertson:

Check if the insurance company charges interest for paying by monthly direct debit. Some do, some don’t. You can often make a saving by paying in one annual payment.

Where is the home insurance market heading in 2020?

Industry expert Alec Moore from Weatherbys Hamilton comments that the rise in crime and climate change has unavoidably meant a hardening of rates and a number of insurers withdrawing from the market. Whilst it is hard to see this changing in the near future the leading high net worth insurers are constantly improving their products and compete with each other on quality as well as price. Their response to claims is invariably excellent and you can undoubtedly obtain value for money.

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