The main reason why home insurance is so complicated is that the policies and the marketing material surrounding them are hardly transparent. Also, we often associate this insurance product with the sales techniques that some brokers are using. Nevertheless, home insurance is a very useful product and it has saved millions of people from a real and personal disaster. Let’s look at some tips for choosing the right type of cover.
1. Shop around and Compare
If you’ve ever bought property on mortgage, you know that the mortgage provider will try to upsell an insurance policy. Often by using scare-mongering and persuasion as his main weapon. Don’t fall for it. Yes, it’s true that in order to get a mortgage you are obliged to get home insurance before exchanging the contracts. However, it’s not cast in stone that you have to go with the product that your mortgage broker offers. In fact, in 9 out of 10 cases, the cover he’s offering is highly overpriced. Get his quote and then compare it with at least 5 other quotes. Choose the cheapest but also pay attention to the next tip:
2. Know what’s Covered by Your Home Insurance Policy
A cheap policy that sounds almost too good to be true is probably not very good in the end. It’s all in the small print. Pay attention to what is covered but mostly to what is not covered. The majority of home insurance products out there will come with contents cover (either built-in or optional). The mortgage provider will request that you have the standalone policy (AKA brick and mortar cover) but it’s a good idea to get your contents covered too. We often take our stuff for granted, yet, we forget that an average person during a lifetime accumulates items worth tens of thousands of pounds. Worth covering it? Definitely!
A certain portion of the policies currently on the market will only estimate the value of the property and contents. If you own a large and expensive house or many valuable items, this basic policy might not be enough. The average policy will offer a blanket cover specifying, let’s say a £200,000 ceiling to what you can possibly claim. What if the house turns out to cost £250,000 to repair? If you suspect your policy is not providing enough cover, request a new estimate. Please note that having an estimate done will cost money, so it’s really juggling between losses and benefits.
4. Not Happy? Transfer to Another Provider
Unfortunately, home insurance premiums are bound to go up every year. It’s not your car insurance where you get discounts for good driving. There are no good housekeeping discounts, alas! The property value and repair costs are steadily going up and home insurance is following closely in their steps. However, you may notice that the provider hikes the premium prices too sharply. If this is the case, shop around again and if you find the same level of protection at a better price, by all means, don’t feel shy and transfer away.
5. Keep Your Receipts
Have you ever wondered why it says “keep your receipt for personal records” on every sales slip that you receive at a till? It must be there for a reason. Of course you wouldn’t want to keep receipts every time you’re shopping for grocery but whenever you buy something of value – like appliances or jewellery, keeping a receipt is essential. With home and contents insurance it will help to prove the value of the items should it ever comes to claiming.
6. It’s Time to Do an Inventory Schedule
A detailed inventory is a must for an efficient contents insurance so that you can keep tabs on what you actually own. Do a detailed list and also take photographs of the interior and the objects. Many people in Britain are underinsured. Are you?
7. What Else Can be Added to the Policy?
Apart from the two obvious things – the home insurance and content insurance, the policy may (or must?) contain other types of cover.
- How much money have you invested in your garden? Is it covered?
- Some policies include legal cover. Definitely useful for some people. But is it useful for you? Get the broker to explain you everything to the finest detail.
- Another thing to look for is the emergency cover. It is really useful should your home become uninhabitable (dead boiler, electrical fault, burst pipe). A home insurance policy without the emergency cover will leave you to deal with the disaster totally on your own.
What is your experience with home insurance? Please share your tips by adding a comment.