Everything you should know about home insurance
As cash-strapped homeowners consider cancelling home insurance to save money, experts stress it’s a vital safety net
Many householders have been looking to cut costs because of job losses and wage cuts resulting from the coronavirus pandemic – and one of the financial outlays that some may consider dispensable is the safety net of home insurance.
The cost of insurance has risen 0.5% over the last three months, according to financial services researchers Consumer Intelligence (consumerintelligence. com), which says the average annual buildings and contents insurance policy now costs £151.
And because so many more people have been working from home since the pandemic started, one in seven homeowners (14%) are considering cancelling their contents insurance, as the burglary risk is lower.
However, although there’s less chance of homes being burgled because people are in them all the time, experts say the chances of making a claim for accidental damage has increased. After all, the longer you’re at home, the more chance there is you’ll break something.
Here, Brodie answers common questions about home insurance in the UK and Ireland. 1. If I buy home insurance with a cheap provider I’ve never heard of, are they much less likely to pay out on claims?
“It’s important to get cover that meets your needs – this isn’t always the cheapest available. The home insurance market is competitive, with many providers that pride themselves on paying out claims and good customer service. If you’re unsure of the credentials of the insurance provider, you can check if they’re regulated by the Financial Conduct Authority (fca.org.uk) (FCA), or the Central Bank of Ireland (centralbank.ie/regulation) in Ireland. Firms regulated by these authorities are subject to strict regulatory requirements on how they handle customer claims.”
2. If I accidentally get details (like the type of door locks) wrong on my application form, will an insurer refuse to pay a claim? “When applying for home insurance it’s important to fill out information honestly and provide information to the best of your knowledge. If you find you have accidentally got some of the information wrong, you should contact your insurer straight away. They’ll be able to update the information on your file.”
3. How much do premiums tend to go up if you make a claim? Is it sometimes not worth claiming because the premium will go up so much if you do?
“Insurers will take into account a number of factors when determining a customer’s premium, this includes factors such as claims history, rebuilding cost, crime rates and flood risk. Having previous claims doesn’t automatically mean you’ll pay more for your cover.”
4. If I nip out for five minutes without locking the door or windows and someone steals something from my house during that time, is my insurance invalid?
“If your home has been burgled because you left your house without locking the door, then your insurance cover may be invalidated. It’s important to always make sure your house is secure before you leave. This includes checking all windows and doors are locked.”
5. If I feel my insurance company isn’t treating me fairly or is refusing to pay a claim, can I appeal against their decision?
“Each insurer will have a set procedure for making a complaint. If you’re unhappy with how your insurer has treated you, the first step is to make a formal complaint with them in writing. If, after following this process, you’re still unhappy, you can take your complaint up with the Financial Ombudsman (financialombudsman.org.uk) in the UK, or the Financial Services and Pensions Ombudsman (fspo.ie) in Ireland, who will independently review your case.”
6. Does it make any difference to my insurance premium if I live in a Neighbourhood Watch area or have a house alarm?
“Insurance premiums take into consideration a broad range of factors.
“While location, including crime rates, is considered, there are several other factors that will also be taken into account. Insurers often use information on how secure a property is when they are deciding whether to offer cover, and what premium to charge. Improving the security on your home, such as fitting alarms or high security locks on windows, can help make sure you get the best possible deal when you buy or renew your cover.”
7. If the house alarm isn’t switched on or is broken and there’s a burglary, will my insurer refuse to pay out?
“Some customers may be asked by their insurer to meet minimum security standards to minimise the risk of theft.
“If your insurer has required you to introduce minimum security standards, they may not provide any cover for theft unless the appropriate security devices are properly fitted and used.”