Home insurance is optional for some people – but you are taking a huge risk if you decide to cut corners and not bother with it.
The good news is that buying cover is easy. Price-comparison sites can help you find competitive deals, although bear in mind that some insurers do not offer their products through third parties, so you would need to go to them directly.
Here are some of the key Dos and Don’ts when it comes to buying a home-insurance policy.
DO shop around
Insurers are well known for enticing people in with good deals in the first year and then putting the premiums up when their customers show inertia and stick with them. So make sure that you shop around for the best deal every time you get your renewal quote through.
“When it comes to insurance, loyalty doesn’t pay and new customers will usually get the best deals, so it’s a good idea to get online and find out whether you could get a better offer elsewhere,” said Ben Wilson, of Gocompare.com.
But make sure you look at the cover that’s on offer and compare the policies on a like-for-like basis. There’s no point in cutting costs if your replacement policy doesn’t offer you the protection you need.
DON’T overvalue your property or undervalue your contents.
Mr Wilson said poor valuations could leave you out of pocket – or uncovered.
“When you come to take out home insurance, you’ll be asked for the rebuild value of your property,” he said.
“It’s worth remembering that the rebuild value is different from the market value of your property, which will usually be much higher. Overvaluing the rebuild cost of your property could mean that you’re paying more money than you should be for your insurance, as your insurer will only ever pay the cost of the rebuild.”
On the other hand, make sure you include all your possessions when you take out contents insurance. If you state that your contents are worth £25,000, for example, when in fact they are worth £50,000, it’s likely that your insurer will pay out only half of any claim, even if your claim is for far less than the £25,000 of cover you have been paying for.
DO look at your excess
As well as focusing on the price, check the excess – the amount you have to contribute towards the cost of any claim you make. The lower the excess, the more expensive the policy. Only you know what balance between the two you want to strike.
DON’T double up on cover
Many policies give the option of adding cover for items such as gadgets or bikes when they are away from the home.
“While this can be a good way of protecting your valuables while you’re out and about, it’s a good idea to check that you’re not already covered for some of this before you spend extra insuring it with your contents policy,” said Mr Wilson.
“Equally, before considering taking out a standalone insurance policy for an individual item, it’s worth finding out whether you are already covered for it on your home insurance as doubling up on cover won’t offer you any extra protection for your valuables and is a good way of spending money needlessly.”
DO consider looking at your home security
Having decent security at home can help cut the cost of your insurance, although just buying a cheap burglar alarm is not necessarily going to have much of an impact on your premiums. It’s just as much about having the right locks in place, and making sure there’s no easy way for a burglar to gain entry.
However, as Mr Wilson pointed out, good home security “can reduce the chance that you will have to make a claim in the first place, saving you money and hassle in the long run”.
Be honest with your insurer. If you say that you have a working alarm but it turns out that it isn’t fit for purpose, you risk having any claim turned down.
“The most expensive insurance policy you can buy is one that isn’t valid, so make sure to be as honest and as accurate as possible to ensure your insurer will pay out should you need to make a claim,” said Mr Wilson.