By Simon Markham
Home insurance is a basic term for two different types of insurance
policy. Buildings insurance to cover the construction of your
property and home contents insurance to protect your valuables
and other household objects.
The problem is that not all home insurance policies are created
equal making it difficult to compare like with like. The areas
and level of cover provided vary from policy to policy along
with the premiums. So having a definite idea of what you need
to insure and for how much will help minimise the overall time
and money spent buying it.
TIP 1: Cut the risk, cut the cost
All insurance policies protect against the risk of financial
loss. So to cut the cost, cut the risk to the insurer and you'll
get a lower premium. To give you an idea, here's a quick summary
of the most effective tactics...
. Contact your home insurance company or local neighbourhood
watch scheme and they will send you a list of steps to make
your house more secure and less likely to be targeted by thieves.
. Fit locks to all windows and level 5 (BS3621) mortise deadlocks
locks to the doors. Most insurance companies will give you up
to 10% off your home contents insurance if you have these kind
of locks fitted around your house.
. Having a good alarm fitted by a recognised alarm fitter,
which your insurance company can recommend, can give you up
to 10% off your policy. Bear in mind that these are expensive
alarms which require an annual check up.
. Higher policy excess. You will usually have to pay the first
£50 of any insurance claim, but if you're willing to pay more
then, your premium will fall now.
. Neighbourhood watch schemes. Some home insurers offer discounts
if you live in a neighbourhood watch area; however this is less
common.
. No claims bonus. As with your car insurance; a record of
no previous claims will reduce your premium. If you need to
make a claim, consider whether it may be cheaper to pay for
the loss yourself and avoid an increase in premiums.
. Your age. Statistically, the older you are, the less likely
you are to make a house insurance claim. So if you're a lower
risk this will be reflected in your premiums. Some companies
offer extra benefits to those over 50 such as Saga.
. Extra security. Declare any special safety precautions you've
made for your valuables such as a home safe.
. Your lifestyle. If you have a dog, are teetotal and don't
smoke, be sure to declare this as such factors are used by some
insurers to reduce premiums.
. Occasionally applying to your existing insurer as a new customer
can reduce your premiums. Many insurers offer discounts to new
customers which won't be repeated when you come to renew.
. If you can apply online you will normally get a discount
of around 5%.
Before you carry out any security improvements to your home,
always check with your home insurance company first. They will
confirm which improvements will have the biggest cost cutting
impact.
TIP 2: Know what home insurance you need
Working out an accurate figure for the buildings and contents
insurance value can be awkward, which is why a lot of homeowners
are either under insured or paying for levels of cover they
don't really need.
Buildings insurance covers the re-build cost of your property
not its market value. The re-build value of your home is the
cost of re-building it in the event that it is destroyed by
fire or subsidence for example. The re-build value of your home
can usually be found on your mortgage agreement, or property
deeds. The Building Cost Information Service (BCIS) of the Royal
Institution of Chartered Surveyors (RICS) produces a range of
detailed information on the cost of rebuilding houses and flats
together with a re-building cost calculator.
Alternatively, you can opt for a policy that has an unlimited
or high standard buildings sum insured so you don't have to
worry about insuring the right amount.
Then there is the home contents insurance which covers almost
everything else you would take with you if you moved house.
Make a list of the rooms in your house and write down all the
items contained in each with there value. Then, total the individual
amounts to see what contents insurance protection you need.
Remember to value items such as music CD's, videos and clothing
as their total cost is often missed or under insured. Whether
your wardrobe is full of jeans or designer labels, make sure
you include the cost of replacing them.
TIP 3: Look at separate buildings & contents insurance
If you need both buildings and contents insurance, get quotes
for separate policies for maximum potential savings. Most insurers
do provide them as separate policies and just because one is
cheap for buildings cover doesn't mean they are equally competitive
to insure the contents. Find the cheapest providers for each
component and consider buying each from different insurers.
TIP 4: Shop around for home insurance
Shopping around will yield the biggest savings on home insurance.
Firstly, don't simply opt for the home insurance supplied by
your mortgage lender. They can be convenient when your busy
sorting your mortgage but they're often over priced and chances
are they won't have been compared against other policies on
the market.
When shopping for insurance you basically have three options;
go direct to the insurer, browse the web or use a broker. If
you have the time and commitment you can do all three, but the
fastest and most effective route is to log on and use the reach
of the internet.
The best insurance websites compare dozens of brokers and home
insurance companies in minutes. You only have to fill in one
form to get a list of premiums displayed on your screen from
major insurers and brokers. However, if you have unusual or
very specific requirements the final premium may increase when
confirmed direct with your chosen insurer.
TIP 5: Ask for a bargain
Home insurance has a margin of profit built into it which can
be negotiated down if you're armed with the right information.
Not all insurers will buckle and concede an additional discount
but if you don't ask you won't know.
. First, find the cheapest quote after using internet comparison
sites and phoning a few brokers.
. Select the cheapest quote and contact your existing insurer
first asking them to beat it. If they won't budge contact the
second cheapest insurer and do the same.
. If after your best efforts, the insurer won't budge, ask
them to throw in some extra cover to sweeten the deal or move
on to the next home insurance company and repeat the same steps.
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