If you own or rent a property you need some home insurance to cover your personal belongings. If you own your own home then you also need buildings insurance to cover the cost of rebuilding or repairing your home in the event of fire or other damage.
Home insurance is not a legal requirement and as a result a number of people don't have any insurance at all, or don't have the right amount or type of cover. If you haven't shopped around for house insurance before you could save tens or even hundreds of pounds by spending some time reviewing your home insurance needs.
Buildings insurance covers the cost of rebuilding or repairing your property if it's damaged or destroyed by events such as fire, storm or subsidence. When you buy buildings insurance it's not the market value of the property but the rebuilding cost that is important. The cost of rebuilding a property doesn't include the cost of buying the land so it's normally less than the market value of a property.
The Royal Institution of Chartered Surveyors has a calculator you can use to work out the cost of rebuilding your home.
Contents insurance covers the cost of replacing your belongings if they are lost or damaged as a result of events such as theft, fire or water damage. If your policy provides new-for-old cover, damaged or lost items will be replaced with new ones or you will receive a cash sum to replace them. However, with a wear-and-tear policy the amount you receive is based on the value of your belongings at the time they were damaged or lost. This could be considerably less than the cost of replacing them.
Home insurers use two different methods to decide how much cover you can have and how much to charge you. With a sum-insured house insurance policy you specify the amount of cover you need and the insurer decides how much you should pay. With a bedroom-rated policy, the insurer bases the amount of cover you need and how much this will cost on the number of bedrooms in your property. Bedroom-rated policies have maximum amounts of cover.
You can usually add accidental damage cover to buildings and contents insurance for an additional premium. This cover means you can claim on your insurance if you accidentally damage your home or belongings. It can be an expensive option and many policies include some accidental damage cover as standard.
Personal possessions cover is another optional extra with contents insurance policies. Also called 'all risks' it covers your belongings away from home against loss or theft. With personal possessions you choose the total amount of cover you need and there is normally a maximum you can claim for each item.
If you have personal possessions cover you could save some money on your travel insurance by removing personal possessions cover from your travel insurance policy. However, if you make a claim on your house insurance for lost or damaged baggage you will probably pay more for your house insurance when it's renewed as you will lose some or all of your no claims discount.
You can probably save money shopping around for home insurance but getting the right cover is more important than just buying the cheapest policy you can find. For example, if you under insure your belongings or your property when you make a claim the insurer may reduce the amount you can claim by the proportion that you are underinsured by. This could mean you don't get enough money to replace lost or damaged items or to repair your property. It's also worth checking the small print on policies as there are often exclusions.
Comparison sites are a good place to compare home insurance policies quickly. Again, you need to make sure you get the right policy for you and not just the cheapest. Also remember that comparison sites don't include every insurer, watch out for excesses being increased to give a lower premium, and check how they will use your personal information. You could also search for a suitable policy using an insurance broker. You can find a broker at BIBA. Brokers receive commission when you buy a policy from them.
- Shop around for cheaper home insurance but getting the right cover is more important than just buying the cheapest policy.
- Make sure you have the right amount of cover and check what is covered and excluded.
- Check any excesses on policies as these vary.
- You will pay less if you haven't made a claim in the last few years.
- Comparison sites can be a good way of comparing lots of quotes quickly but make sure you are comparing like with like and check the policy carefully.
- Accidental damage cover is an expensive option. Most house insurance policies give some accidental accident cover as standard. Check how much you could save without accidental damage and if a standard policy will actually give you the cover you need.