Home Insurance Advice

When it comes to household or home insurance, there are two kinds of policy:

Buildings Insurance –  This covers the structure of the house such as:-

Walls, ceilings and the roof
Permanent fixtures and fittings within the house
Decoration within the house
Gates, fences and footpaths that all lie within the boundaries of your property
Pipes and cables

Contents Insurance – This covers the contents you would take if you moved such as:-

Household goods such as cookers and fridges
Furniture and furnishings such as beds, sofas and carpets
Valuables such as jewellery and works of art
Personal belongings such as clothes and shoes
Contents policies may include some cover for replacement of keys and locks, contents of outbuildings, money, freezer contents, loss of metered water, cost of alternative accommodation, replacement glass, television aerials and satellite dishes
None of the insurances are legal requirements but if you have a mortgage your lender will insist you take out buildings insurance. However it is strongly recommended that both insurances are taken out to fully protect you against loss or damage to your property.

What is Covered?

Standard policies will usually cover loss or damage due to:-

Fire, aircraft, lightning, explosion or earthquake
Theft (or attempted theft)
Riots or vandalism
Storms or flooding
Subsidence, heave and landslip
Falling trees
Impact eg. a car runs into your house
Escaping or leaking water or oil
Your liability as occupier of the house

Optional extras (some policies may include these as standard)

Accidental Damage – Under buildings insurance this would cover damage you do to the house eg. during DIY. Under contents insurance this would cover damage you do to the contents of the house, eg. dropping a hot iron on the carpet
Personal Possessions cover – Under contents insurance this covers your possessions away from home, including temporary cover abroad for items such as ipods, cameras and the like
Home emergency – This will provide you with a tradesman that you can call out for free on a 24 hour basis for emergency work such as a burst pipe. A cost limit on call-out charge, materials and labour will apply
Legal Expenses – This will provide cover for the cost of legal proceedings if you need to bring action or defend a claim in respect of personal injury, consumer or property disputes, as well as for any award of the other party’s legal costs

How much will it cost?

The cost of household insurance can vary enormously – an insurance broker who knows the market will be able to select the best policy for you depending on your circumstances. Here are some of the factors that will influence the premium you pay:-

The area you live in. Insurers use postcodes to determine the risk of an area in terms of crime and flooding risk for example
The age of the home you live in
Type of home you live in, especially if it is timber framed, has a thatched or flat roof, if it is listed or situated in a conservation area
Policy coverage – Not all policies are the same and cover and therefore cost will vary

How can the cost be reduced?

Policy excess – This is the amount you have to pay up front in the event of a claim. If you agree to pay a higher excess in the event of a claim your premium will be lower.
Security – If your home is protected by an approved alarm and is well secured by approved door and window locks most insurers will give a discounted premium Neighbourhood Watch – If your home is in a neighbourhood watch area most insurers will give a discounted premium No claims – If you have not suffered any claims in the last few years you will usually qualify for a discounted premium Combined covers – Most insurers will offer a discount if you insure both buildings and contents with them Indemnity only contents policies – Most policies are on a new for old basis where the insurer either pays the full cost of repairing damaged items, or pays to replace them with new items if they are damaged beyond repair or stolen, except for items such as clothes. Indemnity policies will deduct an amount for wear, tear and depreciation. These policies offer savings but are not generally recommended as you may be much worse off in the event of a large claim Sum insured or bedroom rated – Often subject to a maximum sum insured a bedroom rated policy is rated on the number of bedrooms whereas with a sum insured policy it is rated on the sum insured you specify. It is not clear cut which will offer you the best value so it is worthwhile seeking quotes on each

How do I calculate the sum insured?

Building insurance – this can be done either on a bedroom rated basis (subject to maximum amounts of cover) or on a sum insured basis. In regard to the sum insured basis you will need to work out the rebuilding cost of your home. Note this is not the market price but the cost of totally rebuilding the property which should also include costs for demolition if required, clearance of the site and builders and architects fees. The Association of British Insurers has an online calculator to assist with this. http://abi.bcis.co.uk/

Contents insurance – this can be done either on a bedroom rated basis (subject to maximum amounts of cover) or on a sum insured basis. In regard to the sum insured basis you work out how much cover you need. It is essential that you correctly insure all the contents within your house. The easiest way to do this is to make a list of all the items, room by room and make a note of how much each item cost. An amount of inflation then needs to be added to the total value (your broker will be able to provide guidance on this), to achieve a replacement as new cost.

Most policies will include index linking which means that an inflationary amount will be added each year but you should update your insurance regularly to ensure that you are not under-insured.

What if I have to make a claim?

If in the unfortunate event you have to make a claim on your policy if you taken the following steps this will assist in you getting your claim settled speedily and in full:-

Keep receipts for anything of significant value as this will act as a valuation and also as proof of purchase
Take and keep photographs of valuable items
Record any serial/model numbers
Keep a note of how old items are as this may have a bearing on replacements you get
Keep your insurance documents in a safe place and know where they are.
Always read through your documentation thoroughly to ensure you are covered for everything you believe you are and contact your broker about anything you do not understand
Check regularly that your insurance is up to date
Keep a note of the contact details of your broker/insurer handy. Remember you may need to leave your home in case of emergency
You should notify your broker if you have one as soon as is practically possible if you believe you need to make a claim. If you deal directly with the insurer then you would need to contact them.

Where do I go for advice?

There are a huge amount of policies on the market for household insurance and the cost and cover provided can vary widely. It is always best to talk to an insurance broker. As an independent expert who knows the market, they will help you decide what kind of cover you need, and choose the right insurer to meet your requirements at the most reasonable cost.

An insurance broker will put your interests first. They work for you, not the insurance company. You can therefore be sure of impartial advice at all times, a choice of products, and a helping hand.

BIBA – the British Insurance Brokers’ Association – is the largest trade association for insurance brokers. All BIBA members offer the highest professional standards and financial integrity, and always place the interests of their clients first and are regulated by the Financial Services Authority.

BIBA members can be found nationwide, so there is bound to be one near you. More information, including our find-a-broker service, is available at www.biba.org.uk