HOME INSURANCE MADE SIMPLE

Working with the profession to

simplify the language of insurance

TAKE COVER AT HOME!

What would you do if your home was flooded

or struck by lightning or your valuables were

stolen or damaged? Unless you can afford to

rebuild your home or replace all your worldly

goods, buying home insurance to cover

against unforeseen and unfortunate events

is essential. Here's what you need to know.

What is home insurance?

Home insurance is made up of two parts: buildings and contents cover.

• Buildings insurance. Essentially covers the fabric of the property – so the walls, roof, foundations, sometimes outbuildings – and the fixed fittings within it, including bathroom suites and kitchen units.

• Contents insurance. Covers the cost of replacing or repairing furniture and other items if they are damaged, destroyed or stolen. An easy way to think of your contents is everything you would take with you if you were to move house.

Tip: You can buy buildings and contents policies separately or

together from one provider. Most people find it easier to buy both policies from one provider and insurers often incentivise with discounts for doing this.

The average cost

of dealing with subsidence

£6,300

The average cost

of buildings insurance

£230

Do I really need it?

If you are buying your home with a mortgage, your lender will want you to have buildings insurance. This is so they know they will get their money back should a disaster strike your home. You do not have to buy cover from your mortgage lender – you are free to shop around. If you switch buildings insurer, your lender will want to know who your new provider is.

However, even if you own your home outright, it is still a good idea to have buildings insurance. Your home is probably the most valuable asset you will ever own. Insuring your home brings peace of mind knowing that you are protected if your home is damaged or destroyed – as you may not be able to afford the repair or rebuilding costs yourself. It doesn't make financial sense to go without insurance, especially when you consider that according to the Association of British Insurers, the average annual premium for buildings insurance is £230 – just £4.43 a week – whilst the average value of a subsidence claim is £6,300. Buying insurance is well worth the outlay.

If you are a tenant your landlord will probably be responsible for arranging buildings cover. However, check your rental agreement to be sure. You will need to arrange your own cover for your belongings with a standalone contents policy.

The top items

most likely to be

stolen!

Jewellery

53%

Cash

54%

Electronics

87%

Consider what would happen if there was a fire or a flood, or your home was burgled – or a child accidentally hurled a toy at your new 50" TV. Most people could not afford to pay to replace these items or repair the damage caused. According to the Association of British Insurers, the average annual premium for contents insurance is £124 – £2.38 weekly – a small price to pay for peace of mind compared to the £1,600 average theft claim.

Did you know: If you live in a traditional three-bedroom,

semi-detached house you are most at risk from the threat of thieves, with electronics (87%), cash (54%) and jewellery (53%) the top items most likely to be stolen, according to MORE TH>N insurance.

Does my home contents policy cover me if I accidentally damage my possessions?

Most insurance policies include a limited amount of cover for accidental damage – but only for certain items such as mirrors, glass in furniture and electronic entertainment equipment, including TVs and sound systems. However, they do not normally include cover for accidental damage to anything else in the home – but your insurer will offer this as an optional extension, for an additional premium. This extension provides insurance cover for accidents such as spilling red wine on your carpets, breaking an ornament or damage caused by your children whilst playing. It doesn’t, however, provide cover for personal possessions which you take outside the home – a separate extension is needed for this.

How much cover do I need?

There are two types of buildings insurance, bedroom-rated and sum insured:

Bedroom-rated

This is the simplest way to buy buildings insurance. As the insurance company provides you with automatic cover for a specified amount – usually up to £500,000 or £1,000,000 – some even give unlimited cover. The number of bedrooms you have is used to calculate your premium. But be careful, you still need to check that the cover they offer you is sufficient to cover the cost of rebuilding your home.

Sum insured

This is where the onus is on you to decide how much to be insured for, by calculating the cost of rebuilding your home. The 'sum insured' has to be sufficient to cover the cost of rebuilding the property should disaster strike and it is completely destroyed. It's important to remember that this figure can be different to its market value or if, you've just moved, the price you've just paid for the property. If in doubt, ask your insurer for guidance.

Tip: A chartered surveyor can also help with calculating the sum

insured. You can use the Find a Surveyor search on the Royal Institute of Chartered Surveyors' website ricsfirms.com.

Tip: To get an idea of the rebuild cost of your home, use the

ABI's handy calculator at

askciindy.com

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How much cover do I need?

Before insuring your belongings, get a note pad and pen and go round your property from room to room, including the garage and shed, and list all items. Then take the time to work out how much it would cost to replace everything you own should it be destroyed. Make sure you include everything in your home – such as furniture, ornaments, carpets, kitchen equipment, clothes, light fittings, home electronics. Don’t forget things that may be outside for example, patio sets, garden equipment and tools. It is important that you choose a figure that is sufficient, if not you may find that any claims you need to make are not covered in full.

Tip: To make this job easier, many insurers offer contents insurance

calculators on their websites to help you find the right cover.

Value expensive items

Most insurers place a limit on what the insurer will pay out for a single item – anything between £500 and £2,000 – unless you tell them. An expensive piece of jewellery could easily exceed this. The best way to deal with this is to provide insurers with evidence of an item's worth and to ask them to list it separately on your policy. So make sure you get any expensive items valued, photograph them and keep any receipts – or you could lose out if you have to make a claim.

Tip: There are specialist antique and higher-value possessions

Does my home contents policy cover me

if I take my possessions outside my home?

Cover for your personal possessions outside your home is not usually part of the standard cover provided by your home policy – but your insurer will offer this as an optional extension, if you pay an additional premium.

This extension may also include cover for when you go on holiday. Each insurer’s cover is different, so check before you buy travel insurance, as you may not need to pay for baggage and personal belongings cover – and having duplicate cover won’t mean you get twice the money if you claim.

You can get insurance to

cover your personal posessions

outside of your home,

Combining policies

can work out

cheaper

How to buy the best policy

• You can buy cover direct from an insurer, through a financial product provider such as a bank or building society, through an insurance broker, or use internet comparison websites to shop around for home insurance. But don’t buy a policy based solely on price – the cheapest may not cover all of your needs. Try and understand what you are getting for your money and if you are unsure, just ask.

• Get the right amount of cover. Make sure you don't over or under insure your belongings or property. You will waste money or risk not having adequate cover if you have to claim.

• You can reduce your premium – the amount you pay for your insurance – by increasing the excess. The higher the excess – the amount you promise to pay if you do make a claim – the lower the cost of your premium. Of course if you need to make a claim you will have to pay the higher excess, so make sure you can afford this.

• Combining policies for building and contents insurance can work out cheaper. There may also be a discount if you buy other insurance policies, for instance motor insurance from the same insurer. You can also look to buy your cover via cashback websites.

What to be aware of

• Check conditions of cover. Check that you are abiding by the conditions of your policy. If not, the insurer could refuse to pay in the event of a claim. For instance, it might be a requirement that you have locks on your windows or if you have a house alarm, it is maintained by the alarm company annually. • Loyalty doesn't pay. Each year your insurance will come up for renewal. Do some research to see if you could be getting a better deal elsewhere. Don't let apathy get a grip.

• Contact insurers direct. Some insurers don't appear on

comparison sites, so they may be worth checking out separately. • Where you live. This will affect your premium. Insurers use statistics about past claims to decide what premiums to charge for different postcodes. If you live in an area affected by subsidence or flooding or where there is a greater risk of burglaries, for example, you will pay a higher premium.

• Insurers will sometimes give discounts for more mature people – some even have specialist policies for those over a certain age but remember to shop around to ensure you are getting the best price.

• You can get lower premiums from some insurers by joining a local Neighbourhood Watch scheme. Find out more at

ourwatch.org.uk.

Home insurance cover checklist

• Do you need to specify any expensive items of jewellery separately?

• Is new-for-old cover standard when making a claim? • What cover is there for accidental damage?

• Do you have to pay an extra premium to cover bicycles? • Is money covered automatically or do you need to add this to your policy?

• Is the food in your freezer covered?

How to make a claim

Contact your provider as soon as your home or possessions are damaged or destroyed. Most insurers have 24-hour claims helplines. Make sure you report anything that's stolen or vandalised to the police – they will give you a crime reference which your insurer will need.

Also if an emergency should occur, such as your pipes burst or your boiler blows up, check with your insurer first before arranging for someone to fix it as they may make the arrangements for you and cover some or all costs.

What if I am not happy if my insurer turns

down my claim?

First, you must complain to your insurance company. Every insurer has a complaints procedure that you can follow if things go wrong, so check its website or give them a call. Formal complaints should be made in writing.

If they do not resolve your complaint, ask the Financial Ombudsman Service (FOS) (financial-ombudsman.org.uk/consumer/

complaints.htm or 0800 123 9 123) for help. The service is free

but the FOS will expect you to have exhausted your complaint with your insurer first. They will decide whether you have a valid claim or not.

Source: ABI.

Remember if you have

any questions about

home insurance, just

ask me, Ciindy at

askciindy.com