An Englishman’s home is his castle. To ensure that the home is adequately protected from accidents and disaster, thousands of Brits search for a comprehensive home insurance policy each year.
A comprehensive home insurance policy usually contains two elements: buildings and contents insurance.
Buildings insurance provides coverage for damage to your home resulting from a fire, explosion, theft, vandalism, certain weather-related damage, seismic events, and other uncontrollable situations.
The key things you need to know are:
Is buildings insurance compulsory?
You are not required by law to take out buildings insurance on your home. However, if you have a mortgage on your property, the lender may require you to have buildings insurance. Tenants, on the other hand, do not need to worry about buildings insurance, as it is the landlord’s responsibility.
How much coverage do I need?
To ensure suitable coverage, your home insurance policy should cover the full cost of rebuilding your home (including demolition and architect and builder fees). You should also determine if your policy links the rebuild cost with inflation. If it is not linked, you must make sure that the rebuild cost is regularly updated to keep pace with inflation, otherwise you could find yourself facing a shortfall in the event of rapid inflation.You can either use a sum-insured policy or a bedroom-rated policy for your buildings insurance. The sum-insured policy calculates your premium on the basis of the cost of rebuilding your home, which is different from the market value of your home. Alternatively, a bedroom-rated policy determines the premium simply based on the number of bedrooms in your home.
Depending on your insurer, certain circumstances can exclude your buildings insurance from providing coverage, including:
- Damage due to wear and tear.
- Acts of war or terrorism.
- Having your home remain unoccupied for more than 30 days during the year.
This brief list of exclusions is by no means comprehensive, and it is recommended that you always read the terms and conditions of your policy before buying buildings insurance to learn all the possible exclusions. You do not want to find yourself in the uncomfortable position of having to pay large out of pocket costs for your home.
Ways to reduce your premium
Insuring your home can be expensive, but there are many ways you can reduce this cost. Whenever trying to reduce your premium, you should always make sure that you do not sacrifice too much coverage. After all, what’s the point of paying for an insurance plan if it does not cover you when you need it to? Three tips for lowering your premium are:
- While most people are aware of no-claims discounts in car insurance policies, they also exist for buildings insurance. By not making any claims for a year, assuming the insurer provides no-claims discounts, you can reduce your premium by approximately 30-70%. The longer you go without making a claim, the larger the premium discount you will receive, usually with a maximum of up to four or five years.
- Do not just automatically renew your policy. Make sure you shop around to secure the most competitively priced, high-quality policy.
- Increasing your excess (the default amount that you must pay on any claim that you make) will allow you to lower your premium. However, It is important that you do not raise your excess so high that it may prevent you from making claims.
While buildings insurance covers damage to the exterior of your home, contents insurance provides coverage for damage to items inside your home resulting from a fire, explosion, theft, vandalism, certain weather-related damage, seismic events, and other uncontrollable situations. Some other circumstances where contents insurance may provide coverage are:
- Locksmith fees relating to replacement keys and locks.
- If a visitor to your home injures themselves, contents insurance often covers a portion of your legal liability as the owner of the house.
- Damage to TV antennas and satellite dishes.
- Damage to glass in furniture.
Types of policies
Depending on your needs and preferences, you can choose a new-for-old or an indemnity policy. An indemnity policy covers your claim by deducting a certain amount for depreciation. As the name suggests, a new-for-old policy replaces your lost or stolen items with brand new goods. Although new-for-old policies are more expensive than indemnity policies, we recommend them. Often, items in your home have been there for awhile, and the depreciated value is substantially less than you paid for it.
In addition to having an upper limit on the amount of coverage for high-value items, some contents insurance policies won’t cover liabilities under certain circumstances. Always make sure you try to avoid any activities that can invalidate your coverage, since replacing your valuable contents can be a very expensive proposition. The exclusions include:
- Damage resulting from not occupying your home for a certain number of days, usually 30.
- Damage directly resulting from the letting or sub-letting of your home.
- Damage resulting from wear and tear.
- Damage resulting from war or terrorism.
The brief list of exclusions is by no means comprehensive, and it is recommended that you always read the terms and conditions of your contract before buying contents insurance to determine all exclusions.
Ways to reduce your premium
In some ways, reducing the premium on your contents insurance is easier than buildings insurance. There are a lot of strategies that can result in a reduced premium, some of which are listed below:
- Install smoke alarms and place a fire extinguisher in your kitchen.
- Install a security system that includes a burglar alarm. Try to opt for NACOSS-approved ones, as it will likely result in a higher reduction in your premium than a non-approved system.
- Install a safe to store your most valuable contents.
- Join a neighbourhood watch scheme.
- Insulate your water pipes.
You should always check with your provider before making any changes to reduce your premium since policies vary greatly, and what may work for one provider, may not work for another.
Making a claim
When it comes time to make a claim on your buildings or contents insurance, something bad has happened. Even if it’s something as minor as a broken window, you are probably upset. It is important to suppress your emotions and address your claim in a calm and rational manner. To make a claim, follow these steps:
During the incident
Your first step depends on the nature of the incident. If you have suffered a theft, you should immediately call the police. They will take forensic evidence that will assist in apprehending the thief, as well as provide you with a crime reference number, which will be required in order to make a claim on your home insurance policy.
If the incident is non-theft related damage, you should take photos and write down any pertinent details. You will be asked to describe the incident to your insurance company, and the more details you have, the better your chances of your claim being successful.
After the incident
Once you have taken down the details, you should retrieve your policy documents. In these documents you will find your policy number, as well as your insurance company’s claims helpline number. The claim helpline will tell you to fill out a required claims form, which can mailed to you or downloaded on their website, and then return it to them within an agreed-upon time period.
They will also ask you to include any evidence relating to the claim that you may have. Examples include receipts, debit or credit card statements, photos etc. Try to provide as much evidence as possible so the claims process will move along faster.
If you submit a large claim, your insurer is likely to send an investigator to your home to confirm the loss of damage that you listed in your claim and determine how much the incident will cost to repair or replace.
After the claim
After your claim has been submitted, you will have to wait for the insurer to process your claim. The process can sometimes take a few weeks, so be patient. As long as you filled out the claim honestly and accurately, and your policy provides sufficient coverage, your claim should be accepted.
If you believe your home insurer has unreasonably denied your request, you should follow up with a letter. If they do not adequately address your letter, you may have recourse with the Financial Ombudsman Service, who has the legal power to force your insurer to cover your claim.