Insuring your home means doing two things, insuring the building, and insuring the contents. Insurers call it household insurance and it is made up of separate buildings and contents cover.
Do I need it?
If you have a mortgage, your lender will insist that you insure the property you are buying (and will usually try to sell you the policy). Contents insurance is a matter for you.
Buying home insurance
There are a number of ways of getting cheaper insurance:
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- You can buy direct, over the internet or through an insurance broker. In all three cases, you should check with several companies - and do so every year.
- You may get a better deal by buying combined buildings and contents insurance.
- If your home meets the insurer’s security requirements you may get a discount. If you live in a high risk area, extra security may be required.
- You may get a discount by agreeing to more than a one-year deal with the insurer. Make sure that you have the right to re-negotiate if they put up their rates.
- If you agree an excess, whereby you pay for the first slice of any loss, you will get a discount on your premiums.
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How much cover do I need?
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- For buildings insurance you need to insure for the rebuilding cost, not the value of the property. This will be lower for detached houses and higher for terraced houses and flats, where rebuilding your home would also affect your neighbours. Your mortgage lender will tell you how much to insure for when you take out your loan. Otherwise, ask a surveyor. Your insurance company or broker should have tables of rebuilding costs to act as a rough guide too.
- Many policies include automatic index linking so your cover and the cost will go up each year. Keep your own check and adjust your cover up or down as necessary.
- For contents insurance make an inventory by going round each room and adding up the value of everything in it. Most things apart from clothes can be covered on a new for old basis. If the item is worth more old than new - such as your 1952 Fender Telecaster guitar, or your Chippendale chair - insure it under all-risks.
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Tip
If you have a caravan, trailer or boat it will usually be covered under your motor policy while you are trailing it. While it is parked at home, consider adding it to your household cover or look at the special insurance deals negotiated by caravan clubs. You may save money if you invest in approved security devices. |
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