Home Insurance
Q How can I save money on my home insurance?
There are two types of home insurance: buildings, which covers the structure of your home and insures you against things like fires or flood damage, and contents, which covers what’s in your home, insuring you in case of theft, fire and damage. You can buy them as a combined policy, or two separate ones. For both, the main way to save is the same: don’t be loyal. If you renew with the same company every year, the reward you’ll get for your loyalty is usually a hefty price increase, because insurance companies give the best deals to new customers. If you’ve been with the same company for a few years, the difference could be hundreds of pounds. Comparison sites like moneysupermarket.com and gocompare.com make it quick and easy to shop around. If you’re not online, just ring round a few companies.
Some companies put you on auto-renewal, which means they’ll renew the policy each year unless you tell them not to. It’s convenient, but you’ll pay for that convenience. Always specify that you don’t want auto-renewal and instead, make a note in your diary a month before your policy expires, so you have time to look for cover.
Another way to cut the premiums is to accept a voluntary excess. That’s the amount you have to pay towards any claim, and also the cost a problem has to reach before you can make a claim at all – so, for example, if you have an excess of £100, you can’t claim for anything that costs less than that, and you’ll pay the first £100 of any claim. All policies have a compulsory excess, but if you accept a higher one, the premiums will be cheaper. Be realistic and only choose an amount that you wouldn’t struggle to pay if you needed to.
Finally, have a look at your locks – securing windows and doors with industry-approved locks can cut your premiums.
Q How do I know how much cover I will need?
According to research by the Association of British Insurers, one in five households are under-insured on their contents policy – and that could mean a nasty surprise if you claim. Let’s say you have cover for £30,000, but your household contents are worth £60,000. If you lost £5,000 worth of possessions in a burglary, you might think you’d be OK, because you’re covered for six times that. In fact, your insurer could decide you were 50% under-insured, and pay only £2,500. To make sure you’re covered, go room by room and estimate the cost to replace everything – not just big items like the TV, but things like DVDs and books, which could add up to thousands. You can also find useful calculators at directline. com and theaa.com. Most policies limit what they’ll pay for an individual item, unless they’re told about it when you buy the policy. If you have an expensive TV, computer or watch, for example, let your insurer know, or you might not get their full value if you claim.
With buildings insurance, the risk is more in the other direction – people often think they have to insure for the price of their house, but in fact you only need to cover the cost of rebuilding it. You can find a calculator that’ll help you work out the rebuild value at abi. bcis.co.uk. Also, remember you only need buildings insurance if you own the property. If you’re renting, it’s the landlord’s responsibility (but the contents insurance is down to you).
Q If my insurer won’t pay out on my claim, what can I do?
You can take problems with insurance companies to the Financial Ombudsman Service – not just issues with unpaid claims, but also unfair charges and conditions, such as unexpected restrictions hidden in the small print. You need to give the company a chance to put things right first, and it’s always best to put your complaint in writing. If you’re online, a very useful service is Resolver (resolver.co.uk), which helps you draft a complaint and keep track of the progress.
If you don’t get a satisfactory result within eight weeks, the Financial Ombudsman Service can take a look. You can use their online complaint form at financial-ombudsman.co.uk, call 0800 023 4567, or write to them at The Financial Ombudsman Service, Exchange Tower,
London E14 9SR.