If you own your own home, home insurance is essential to protect your building and its contents. Go without it, and you leaving yourself vulnerable to fires, flooding and burglary.
The good news is, many homeowners are saving money on their home insurance premiums, as various price cuts feed through to lower bills.
The bad news is, not everyone is benefiting, with people in some areas such as London and the Midlands, for example, still seeing premiums increasing. This may be down to crime rates and local incidents, such as the impact of bad weather.
IPT hikes could push costs up further
As a homeowner, you also need to be aware that any increases to insurance premium tax (IPT) could push up home insurance premiums. IPT works in a similar way to VAT in that it’s added to the total price of insurance policies.
Given that the cost of home cover could head upwards, it’s worth knowing some of the simple steps you can take to help bring costs down.
Your insurer will base your premium on how secure your property is, so take steps to bolster security, such as installing approved locks on your doors and windows, fitting a burglar alarm, buying a safe and installing security lighting.
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Carry out measures to reduce damage
Take steps to prevent issues arising, such as installing smoke alarms, removing trees which are too close to your property, keeping gutters clear, and insulating your pipes properly (so they won’t freeze and burst in the winter). Also join your Neighbourhood Watch scheme. These could all help bring down the overall cost of your policy.
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Think about upping your excess
The excess is the amount you must pay in the event of a claim. A simple way to lower the cost of your home insurance premiums is by opting for a higher excess. But be sure you can still afford to pay the excess if you do need to claim on your policy.
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Don’t buy home insurance from your lender
While it’s compulsory to have buildings insurance in place if you have a mortgage, you are not obliged to take out cover from your lender. Do your research, as you can usually find a cheaper deal elsewhere.
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Bundle buildings and contents together
You should be able to get yourself a discount on the cost of home insurance by purchasing a “combined” policy that offers both buildings and contents together.
You may be able to reduce the cost of your annual premium by purchasing your policy online.
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Don’t opt to pay via monthly payments
While paying your premium in monthly instalments over 12 months may make your insurance more affordable, this could work out more expensive. Insurers add interest to your monthly payments so you’ll end up paying more overall. Opt to pay it in one lump sum upfront instead.
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Build up a no-claims policy
Another good way to keep costs down is by paying for minor repairs yourself, rather than make a claim. That way, you can build up your no-claims discount, which should mean savings on your premium after five years or so.
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Cut out the frills
It can be tempting to add “extras” to your basic package such as home emergency cover, accidental cover, legal expenses cover or increased garden cover. Keep costs down by only paying for the ones you really need. For example, if you love a bit of DIY, then adding accidental damage cover is a good idea, or if your garden is your pride and joy and you have lots of garden tools and garden furniture, then additional cover makes sense.
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As a homeowner, it’s important to get sufficient cover limits for your buildings and contents, as if you underestimate the value of your possessions – or the cost of rebuilding your property – you could end up in a sticky situation if your cover falls short when you come to claim. That said, there’s no point getting too much and paying more than you need to.
With buildings insurance, you need to have enough to cover the cost of rebuilding the property (not its open market value). To work out how much cover you need, check out the Building Cost Information Service (BCIS) of the Royal Institution of Chartered Surveyors (RICS).
With contents insurance, the best approach is to go around your home room by room, adding up the value of all your belongings.
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Insurance comparison sites – what you need to know
If you want to use a comparison site observe a few simple rules:
* Beware of special offers. As well as “exclusives” they may also be heavily promoted as “best buys”, “editor’s picks” or “popular” choices. Consider them by all means, but just be wary that they may be at the top of the list because they are paying the website to promote them.
* Make sure you’re comparing like with like. A policy with a low premium may have high – or multiple – excesses (the amount you have to pay towards your loss yourself, before the insurer pays out).
* “The lower the premium, the higher the excess” is the usual rule of thumb. Make sure you are clear about what you are covered for and what you can’t claim for.
* Cheapest is not always best. The insurer may be keeping its premiums down because it has a poor record of meeting claims.
* What you see may not be what you get. Comparison sites try to make your application as easy as possible, so that you go on to buy and don’t get put off by lots of niggly questions at the start of your application. The site may not be asking you for enough information to give you an accurate quote.
* One site is not enough. You need to use more than one because they will feature different insurers and offer different promotional deals.
* Read the policy documents. Finally, don’t rely solely on the blurb provided by the comparison site. Always read the small print provided by the insurer.