If you have a house with a mortgage you’ll have to take out home insurance, which is insurance against damage caused by subsidence, fire and flood; the level of cover required is arrived at by calculating the estimated cost of rebuilding the structure. If you add extensions to the house after taking out the policy the insurer must be informed so that they can provide cover for the added cost of rebuilding.
If you have a lease on a flat in a block, for example, your landlord may already have put buildings insurance in place, so you won’t have to bother. Also, bear in mind that if you leave a property for prolonged periods or let it out without telling the insurance company the policy may be void.
Contents insurance is optional, but is highly recommended, as it covers the replacement of movable items in your home, even when you are using some of them away from the property. It covers furniture and appliances, although fixed items such as fitted kitchens may already be covered by the buildings insurance and possibly also the garage and greenhouse or shed. It’s important to check exactly what is covered by each policy, as there’s no point in covering the same things twice, which will obviously be more expensive.
Travel insurance may have to be arranged when you are taking certain items abroad with you, although again these may already be covered by the contents policy.
‘New for old’ cover on contents is better, but a little costlier than basic indemnity cover, as it will replace lost or damaged items with brand new ones rather than with ones of about the same age.
Buildings insurance policies cover your house against loss through fire, subsidence and flooding. The contents of the house are not covered and to insure these you’ll have to take out a contents insurance policy. Fittings such as baths and kitchens, which are fixed in place, are also frequently included in the buildings insurance cover, together with garden sheds and garages.
Buildings insurance is not optional if you have a mortgage, as is contents insurance, and despite often being offered a buildings insurance policy when taking out a mortgage you are quite free to reject it and shop around for another one at a better price.
If you are a tenant you may very well find that the landlord already has buildings insurance in place for the entire block of flats, for example and that you need not concern yourself with it.
The amount that will be paid out should your property be completely demolished or severely damaged for some reason is the estimated cost of rebuilding or repairing it. You need to make sure that you have enough buildings insurance in place for this to happen, and if for example you have extended your home or added a loft conversion you will have to tell the insurer so that the policy can be altered accordingly.
Shopping around is always a good idea with any form of insurance and buildings insurance is no exception. Also, you will usually get a discount by combining buildings insurance and contents insurance, but do your research thoroughly, because the combined premiums may still be higher than those offered by another insurer.
Your home is an important part of your life as well as being probably your single biggest investment. Along with furnishing and maintaining it, it is important to protect it, not only physically, but financially too. Home contents insurance and buildings insurance policies come in many shapes and forms and when you compare home policies you’ll find a great deal of variation in the level of cover offered.
Buildings insurance is designed to cover the cost of rebuilding your property should fire, flooding, subsidence or other disaster strike it. Mortgage lenders insist you take out buildings insurance as a condition of making the loan, as this is their security against loss of the property. Whether you accept their recommendations for insurance providers or look for your own is up to you, but it’s worth shopping around.
House contents insurance is your choice and although you don’t have to take it out it is highly recommended. As well as accidental damage to your possessions, home contents insurance covers you for theft. Burglars can strike anywhere and anytime and are often more active during economic downturns, so it only makes sense to insure your personal effects against them.
Take out a new-for-old home contents insurance policy or go for the cheaper indemnity type. Take care which boxes you tick, as there will be options that don’t apply to you as well as others you’re particularly interested in and the cost is adjusted depending on the amount of cover you request. The cost of home contents insurance can be substantially reduced if you opt for a higher excess.
Getting a home insurance quote online will enable you to get an idea of what you will be covered for and how much it will cost. Obtaining a quote is quick and easy and provides you with all the information you need on your home or contents insurance. To get the best quotes, you may wish to visit comparison websites, where you can compare quotes on a wide variety of insurance companies.
When getting a quote online, the information that you need to provide may vary depending on which company you have opted for. You will usually need to provide your details, along with details of your property. You will be asked to provide information on the type of property you own, how many bedrooms the property has and security details for the property. This information will be given using an online form on the insurance company’s website.
Once you have given details about yourself and your property, you will be provided with details of your cover, which will be based on the information that you have provided. Once you have seen the details of what you will be covered for, you can view the results of your quote. This will provide you with the details of the cost of your home insurance policy.
Many comparison websites allow you to save your quotes and compare with other companies. You can also access saved quotes at any time on some websites. An online account is usually needed in order to save and retrieve quotes. Online accounts with insurance companies are easy to set up and usually free.
What is home and contents Insurance?
Home insurance is the product you buy to cover the structure of your home; while contents insurance is the product you buy to cover your possessions. The former is mandatory for anyone owning a home; the latter is optional.
Selecting the right home and contents insurance can be a little daunting; how much cover is enough, how much is too little, does this policy cover everything I need it to and so on? By investing some time in the selection process you can ensure that your needs will be met in the event of a claim.
How do I find the right policy for me?
Most mortgage lenders offer home and contents insurance, but before taking out one of their policies it is wise to take some time to do a bit of comparison-shopping.
On the Internet there are lots of sites that enable you to compare home insurance by using data that you provide to compile a list of alternative products. Brokers also can provide comparison deals or you can contact individual insurance companies yourself by Internet or telephone.
How much cover will I need?
The amount of coverage varies, based on individual circumstance. For home buildings insurance the amount should be the cost required to rebuild your home if it were completely destroyed, which is not the same as its market value. For contents insurance the amount should reflect the cost of replacing all of your household items, less depreciation for clothing and linen.
Most people understand that if you have a mortgage you must have, at a minimum, buildings insurance to cover the structure of your property. But what many don’t realise is that there are also types of specialist building insurance that cover non-typical scenarios. Below are some of the primary ones.
Self-Build Insurance
Self-build insurance covers a structure and its owners during the building process when the owner is building their own home. Self-build insurance covers a wide-variety of situations that might occur, including:
• Liability as an, ‘employer,’ which applies if a friend or volunteer is injured and decides to make a claim. This policy protects you from any liability as an employer.
• Further liability, which extends cover to protect against claims by a third-party who is injured.
• Public liability ensures you are protected against claims from members of the public or passers by who might be injured in some way.
• Existing structure cover ensures that the lender’s interests are noted.
• Cover in the event of contractor and/or supplier disputes. This includes any sub-standard work or materials.
Holiday or Expat Home
Anyone who spends a great amount of time away from their home can fall victim to their standard buildings insurance policy being voided. Specialist building insurance provides that much-needed cover.
Work from Home
This is useful when your buildings insurance does not cover home office equipment; some policies automatically cover up to £5,000, others do not.
Student Circumstance
These specialist policies take into account the insecure nature of rental contracts for student accommodation.
As with home insurance, your contents insurance cover should directly reflect the amount it would take to replace all of your household possessions if they were to be completely destroyed.
Determining your contents insurance needs
The average family is worth more than £45,000 in household possessions; however, to get an accurate assessment for you own specific requirements you would need to conduct a room by room inventory; including everything in the loft, garage, cellar and/or garden shed, as well as the main structure itself. Once listed, you would need to calculate what it would cost to replace each item at current prices; adjusting for typical wear and tear for things like clothing and linen.
While this is the most accurate way to determine the level of cover, for those looking for an easier solution there are insurers who offer a maximum amount of cover that, if acceptable to you, eliminates the need for maths. If the maximum amount is not sufficient additional blocks of cover can be added, for a price of course.
Working from home
Some insurance companies do not cover losses that result from home business activities; others provide a standard £5,000 maximum for home business equipment. If you work from home on a regular basis be sure to indicate the type of business separately from the home cover your policy provides. It might be that you will need to buy an additional policy to cover any business-related equipment you might have in your home.
Buying a house is probably the biggest investment you’ll ever make, so it’s important to get the right building and contents insurance. Here are some buying tips for finding good and cheap house insurance:
Shop around
Always shop around; never go with the first insurance policy you’re offered or even the insurance offered by your mortgage lender without doing a bit of research first. Differences of £66 a year on buildings and contents insurance are typical; over a 25-year mortgage term, that amounts to £1,650.
Only buy what you need
This is the first rule of thumb when buying house and contents insurance; only get what you need. Too much insurance will cost you more in premiums; too little insurance and you’re left in the lurch when needing to claim.
Make sure it really does cover you
Unfortunately, just because an insurance company has sold you a policy, it doesn’t mean you’re eligible to claim on it! To make sure you are covered properly take the time to read the fine print and have everything confirmed in writing.
Avoid tie-ins and bundling
As the mortgage market becomes more competitive, mortgage lenders are looking for new ways to lure you in via great-sounding low-interest deals. But, they make it up elsewhere – often through compulsory and highly over-priced insurance policies (known as “bundling”) and penalties for going elsewhere (known as tie-ins). No matter how attractive the mortgage offer may seem, it is best to avoid these schemes; because it will cost you in the long term.
With the mortgage market being as competitive as it is, lenders often look to new ways of ‘luring’ new customers in. Often, this is achieved by way of offering reduced interest rates and creating what seem to be great deals, at first glance. However, these mortgage lenders are not losing money, they make up for the low interest rates elsewhere in the deal, often through techniques known as home insurance bundling and tie-ins.
What is bundling?
Home insurance bundling involves the use of compulsory purchases to force the consumer into purchasing their insurance policies as part of a package with the mortgage product. Generally, these policies are highly over-priced to ensure that the lender will recover the losses they make from low interest rates offered in the mortgage. In the end, the consumer is more out of pocket than they would have been if they’d gone with a higher interest rate mortgage and separate home insurance.
What are tie-ins?
Similar to bundling, home insurance tie-ins are not compulsory, but come with large penalties when you refuse them. Basically, it is a form of high-pressure sales, in which your lender tells you to take out their home insurance products or face fines.
Avoid at all costs
If your mortgage lender uses either method to pressure you into purchasing their home insurance and/or contents insurance policies, along with your mortgage product, it is time to become buyer aware. The cheaper mortgage may look the best deal, but in most cases if it comes with bundled or tied-in insurance, in the long term, it is going to cost you more.
If you have a property that has been left unoccupied for a long period of time then you may be able to claim house insurance. If you are a landlord and your property has been left unoccupied due to not receiving tenants or a tenant has just moved out then you may be able to claim buildings and contents insurance for your vacant property. You can also claim house insurance if you are planning to sell a property that you were previously renting out.
Obtaining a quote will give you idea of what will be covered for your unoccupied property. There are many websites that allow you to compare unoccupied property insurance companies. If you are planning to have a house renovated in order to make it suitable for tenants to rent, then you may need to provide details of what repairs need to be done before obtaining a quote.
As some standard insurance policies do not offer cover for unoccupied properties, it can be difficult claiming this type of insurance, but shopping around will allow you to find a company that offers everything you need to ensure that your unoccupied property is protected. Many companies fail to provide insurance for unoccupied properties due to the fact that there is a greater risk of the property being vandalised, but you may be able to find a specialist insurance company that offers a policy which will provide cover for your home and contents.
Many owners that rent out flats experience problems with squatters, which often causes problems with claiming house insurance. However, removal of squatters will allow flat owners to claim specialist house insurance for any flats that are unoccupied.
August 6th, 2010 by brignallarcher in Buildings Insurance, Contents Insurance, Home Insurance | No Comments »
