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Percy's Top Tips:
"Good security can bring down the price of your home insurance."
Your house - it's both your home and in all probability your largest financial asset. Therefore, protecting it adequately with the right levels of insurance makes perfect sense. There are two main types of home insurance - building and contents. While the labels make their purpose self-explanatory, it's important to bone up on the detail under each one to make sure you get the right cover for your particular needs.
What does building insurance cover? This is all about repairing, replacing and restoring the fabric of your property should it suffer damage due to fire, storm, flood, explosion or earthquake, theft, riots or vandalism, subsidence, or moving objects - such as a falling tree or crashing vehicle. Any home owner with a mortgage must have buildings insurance.
So how much cover do you need? Basically, you need to insure for the rebuilding of your home should that be necessary. The cost of a rebuild is not the same as the property's current market value, and an all inclusive rebuild cost is calculated for the insurance companies by the Association of British Insurers. Buildings insurance can be calculated in two ways. The first is called sum-insured and works by an assessment of what the actual costs are to rebuild your property. The second type is called bedroom-rated and, as the label implies, is estimated on the number of bedrooms your home has and how much it would cost to provide the equivalent sized property.
Other factors include risk of flooding. Given the recent increase in the number of areas that have been flooded, this aspect of buildings insurance is often in the news. Thanks to the agreement the government made with insurers, cover is still made available to those existing customers who live in areas of high flood risk - the deal here is the government must make available sufficient funds to maintain and improve flood defences. It's a good idea to check out whether your property is in an area prone to flooding, whether by rivers or sea, by examining the maps on the Environment Agency's website.
Subsidence is another area of insurance where property owners can come a cropper. Most companies will cover subsidence provided it's not caused by a fault of the owner, but you must expect there to be a high excess - around the £1,000 mark - should you need to claim. To minimise the risk of subsidence don't plant trees close to the property and ensure the pipes around the property are maintained and not leaking.
All the experts, and punters with a claim tale to tell, agree that under-cutting on home contents insurance is not a good idea. A policy requests that you provide a 'sum insured' which is the maximum amount the insurance company will pay out for your contents. Consider the outcome were you to knock off 50% of the contents' real value to save on premiums and then find yourself claiming for a £1,000 replacement kitchen floor, only to find yourself covered for half the financial outlay? Cutting back on your contents' true worth isn't worth it!
Set about drawing up a list of your contents to make sure every item of value is included. And it's always a good idea to keep receipts for items bought as this verifies costs and age of items should you have to make a claim. If you have some items that exceed the values limited by the policy, find out how much it would cost to have these listed separately, and so appropriately covered, in the policy. Regularly review your contents cover, particularly if you are in the habit of buying the latest gadgets!
Are extras worth the extra expense? Much will depend on your individual lifestyle. Accidental damage cover is very often the preferred choice of families with young children as they are more prone to such mishaps - think of biscuits being slotted into DVD drives and you get the general picture. It is essential to research each policy as what is covered under accidental damage will differ between policies - for example some include visitors' possessions in your home during a visit, others don't.
Sometimes these extras are packaged up under labels like 'cover plus' or 'deluxe cover'. They'll include the more general domestic mishaps such as any freezer items lost during a power cut, for example, but also go that extra mile with guarantees to replace a matching set of crockery even when just one item in the set is damaged, when the piece cannot be repaired or replaced to match. Weigh up what such an offer means to you against the premium you'll be charged.
Home emergency and legal expenses cover, again, are must-have bolt-ons for some families, but of no interest to others because there really is no need. What you need to do is to research the entire list of additional protection to make sure you're buying what you need and not what you don't.
As with all insurance deals home contents insurance has its own list of exclusions which feature on most policies. In this instance the following exclusions are pretty standard: losses when you've sub-let your home; theft or damage caused due to careless regard to security; damage caused to an unoccupied property - pipes bursting is a typical example.
- Buildings and contents combined - the most effective way to reduce home insurance cover is to look at discounted offers of combined insurance - where you buy a joint policy for buildings and content insurance from the same provider.
- Increase the voluntary excesses - that's the amount of money you'll pay first for any damage before the insurance company settles.
- Protect your no-claims bonus - by first not making a claim for minor repairs, and second by reducing your risk of making a claim by upgrading your property's security.
- Locks - check they are secure and limit the number of keys to them. Doors should ideally be fitted preferably with a 5 lever mortice deadlock, though insurance companies will accept a rim automatic deadlock; both must be to British Standard 3621 or the equivalent European Standard EN12209. You can get good tips on security at http://www.met.police.uk/crimeprevention/
- Security - install a security alarm system, time-switch lights and other security lighting.
- Join a neighbourhood watch group. Some insurance companies will offer you discounts to members.
- Fit smoke alarms.
- Don't leave property empty.