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Don't fall for these home insurance myths!

Robert Powell
by Lovemoney Staff Robert Powell on 07 February 2011  |  Comments 9 comments

Robert Powell hits the streets to find out what you know about home insurance...

Robert Powell hits the streets to dispel these home insurance myths

The last couple of years have seen Britain battered by floods, roasted by soaring summer temperatures and frozen by snow storms.

These erratic weather conditions have pushed up home insurance rates – making it more important than ever to get a good deal as well as the right policy.

But how much do we really know about home insurance? I’ve hit the streets to find out...

Standard home insurance covers accidental damage

You usually have to pay extra for accidental damage insurance – most providers will bump up your standard premiums by around 20% if you want to add this cover to your policy.

Accidental damage is defined by most insurers as ‘damage that occurs suddenly as a result of an unexpected and non-deliberate action.’

This means it won’t cover general wear and tear or mechanical failure.

You should insure your home for its full market value

The amount of building insurance you take out should only cover the rebuild cost of your home.

This is because you only need to cover the costs of rebuilding the house from scratch if it is destroyed.

The rebuild cost of a property is usually far cheaper than its market value. That is unless you live in a period property or unusual type of home where the rebuild materials may be hard to come by and expensive to purchase.

My home insurance will cover all my valuables

Just because you have full contents insurance, that doesn’t mean that every individual item will be covered.

You may find some expensive items such as jewellery and computers are underinsured or excluded from the policy all together.

Most insurers set a single item limit of around £1,500 and may even specify certain items that are not covered at all. If this is the case you need to take out separate insurance for these items.

It’s also worth looking into single item insurance for wedding rings, mobile phones and other items you frequently have on you outside of your home.

Standard home insurance covers flood damage

Standard insurance policies will not cover flood damage - you’ll have to take out extra cover if you live in a flood-prone area.

However some providers won’t even insure properties that are particularly at risk from flooding.

Like most types of insurance policy, the devil really is in the detail when it comes to home cover. So it’s essential you read all of the terms and conditions fully when you take out any policy.

You can head over to lovemoney.com’s home insurance centre to compare policy prices and get the best deal.

More: Get a great home insurance deal | Protect your home against flooding  | Don’t make this home insurance mistake

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Comments (9)

  • jdey123
    Love rating 3
    jdey123 said

    Other observations are:-

    1. Water damage from an "Escape of Water" i.e. water leaking from a pipe or hose is covered but the cost of "trace and access" i.e. for you to discover the source of the leak (could involve knocking down walls etc.) or the repair of the original leak (will involve a plumber) often isn't covered.

    2. Insurance is a service as well as a product. Rather than going for the cheapest option using the comparison sites, you should also take in to account brokers surveys and comments on forums by policyholders who've had the misfortune to claim. A rule of thumb is the less you pay, the more appalling the claims handling service is likely to be.With a good insurer, you could be provided with alternative accommodation in hours and the claim settled in days. With a bad insurer replace hours with weeks and days with months.

    Report on 07 February 2011  |  Love thisLove  0 loves
  • coversure
    Love rating 10
    coversure said

    5/10 for accuracy. OK 6. You need to insure the rebuild cost of your home. This may be MORE than the market value. If you are judging this, you need to include demolition costs for the existing house. If you want to calculate the rebuilding cost - look here http://abi.bcis.co.uk/index.cfm#calculation You should also mention that if you decide to insure your home for less than this, ANY claim may be reduced pro rata for the uninsured amount.

    Standard insurance policies WILL cover flood damage. Exceptionally if you live in an area prone to flooding, you either will not be able to get insurance or will have to pay an extra premium.

    Buildings insurance will not cover contents at all. You are often better off to purchase a contents insurance from a different insurer than the one that covers your buildings.

    Report on 07 February 2011  |  Love thisLove  0 loves
  • micky66
    Love rating 3
    micky66 said

    I had the misfortune of having a house fire in September 2008. My tumbledryer blew up like a bomb (it had been used that day) I was in the house at the time. I unplugged it and called the fire bridage as a matter of caution as I didn't like the look of the towels that were now brown.

    I am glad that I did take this precaution as on the intruction of emergency services they told me to go to the front of the house with my daughter and pets and wait. Whilst working around to the front (30 seconds or so) black smoke was billowing out from all over the house...

    Two fire engines and four hours later the fire was out. It was caused by the backdraft from where the hose used to be attached to the tumbledryer to outside.

    The house was gutted. This is were the nightmare really began. The fire happened on a Friday night and it was midnight before I was allowed go in and see the damage for myself. I had no belongings that were fit for purpose and more importantly nowhere to go. I rang the insurance company in the presence of the fire investigator to be told that this was not considered an emergency a broken down boiler was. I had to friend some where to stay until the Monday when all offices were open. This is when the true nightmare began.

    If I went in to all the details I could be writing on this blog all day. Both my contents insurancers and building insurers had the same loss adjustor. This is important to ask because the way I was treated from the outset was appalling. The loss adjustor would not go into the property and assess my belongings because of asbestos contamination (the fire bridage did not tell me I couldn;t go back in) I had to then employ an independant loss assessor to deal with my dual claim as I was and I holding down a full time job.

    I had a firm of cowboy builders start the refurbishment in March 2009 and it was supposed to take 12 weeks. I finally kicked them off the job as what they commenced to do made my house worthless. I then had to get another firm in and start all over again. Insurance companies do not advice you at all during this process and you are left to get on with it yourself.

    Insurance companies then employ cleaning/salvage companies to come and 'rob' you of anything of any value and clean up lesser items, store them and this all comes out of your contents money.

    It took me over two years to get me claim for contents finalized at a huge personnal expense to me, plus the stress and worry of trying to project manager a firm of builders was a nightmare. I don't think I had a decent nights sleep or a day of for leisure in all that time.

    They did pay for my rented accommation for 12 months however being late for the last six months because the invoice was sat on someone's desk meant that the landlord served me with a NTQ (notice to quit) it was finally paid. Someone else sat on the invoive for paying the company to board up my house and that to resulted in me being sent invoices personally to my burnt out house only to be threatened with a county court judgement.

    I could go on and on about the nightmare and incompetencies and should anyone out there want advice as to what to do in the event of fire/flood please feel free to ask. However I would not recommend anyone NOT TO HAVE building and contents as the expense to replace even the smallest of items is enormous. It leaves you seriously out of pocket and if I knew then what I know now.. Also I was very well insured but this means nothing.. Loss adjustors are paid to make sure the insurance company pay out as little as possible.

    Needless to say I am still fighting my case and I hope to win...

    Thank you taking the time to read this.

    Report on 07 February 2011  |  Love thisLove  3 loves
  • Severian
    Love rating 6
    Severian said

    This article is mostly accurate, except the comments about flood insurance. All policies usually include this, it's just some very specific areas with history of flooding where the insurers either won't cover or just have a massive excess.

    I think Micky66 should put in a serious Financial Ombudsman's complaint (if you haven't already done so).

    The headline "don't fall for these home insurance myths" is misleading. It should be titled "pay a bit of attention to what you're buying, because getting it wrong could be damaging".

    Report on 07 February 2011  |  Love thisLove  1 love
  • jdey123
    Love rating 3
    jdey123 said

    Not sure I'd recommend the financial ombudsman to micky66, unless he's got a masochistic streak after spending so much time dealing with insurance companies. For the FOS, you have to complain to the insurance company, get a final complaint, wait 8 weeks but no more than 6 months before complaining to the FOS. You'll then have to wait months for an adjudicator to look at your case, the adjudicator isn't legally trained and there's no cross-examination. The FOS is also funded by financial services companies and despite the unlikelihood of complainants making spurious claims given the above, they still find against the complainant more often than not.

    The other thing to bear in mind is that the FOS is supposed to be the consumer facing wing of the FSA. The tweedledum to the FSA's tweedledee, if you will. The FSA was set up with the legal requirement to treat customers fairly but prior to the financial crisis had prosecuted virtually nobody. This they referred to as 'light touch' (read non-existent) regulation. Under threat of disbandment, they have upped their game a bit, but it's still the case that they've done nothing to prevent PPI from being mis-sold, for example, forcing thousands of complainants through the FOS process.

    The best way is to try to avoid this situation in the first place. This survey is a bit out of date, but ranks insurance companies by how well brokers clients have had their claims dealt with.

    http://www.broking.co.uk/insurance-age/opinion/1563999/the-bad-average

    Report on 07 February 2011  |  Love thisLove  0 loves
  • amwell44
    Love rating 39
    amwell44 said

    Micky66, Chartered Loss Adjusters are not employed by insurance companies to knock your claim down. They are independent experts, engaged to investigate and report on the accurate value of the loss under the terms of the legal policy contract you, the insured, purchased. Of course, if you over-claim, as many people do, the Loss Adjuster will recommend a reduction, but they are bound by a professional code of ethics to treat customers of their principals (the insurance company) fairly, as is the insurer. The cowboys are the loss assessors, such as you engaged, who are known in the business as "claims makers". They will try to maximise your claim in order to earn more commission and they add that to the amount they claim on your behalf. If you are honest and straightforward with the insurer and the Loss Adjuster, you don't need assessors and you will get paid quicker, because another thing assessors do is to get confrontational and string the process out to wear down the insurer. Sorry to hear about all the hassle you experienced, but as has been said already, not all policies are the same in terms of cost and scope of cover. Believe me, I've made mistakes myself and I've worked in the insurance field all my life. Once upon a time, I was a loss Adjuster. Some people complained - they always do - but others would thank me for helping them, even if they did not get what they mistakenly expected.

    Report on 09 February 2011  |  Love thisLove  0 loves
  • phildude
    Love rating 0
    phildude said

    amwell44.

    The one time I had a claim because of a fire the all the damaged articles being claimed for were in plastic bin bags and the loss adjuster for the insurance company still halved my claim. Only to immesdiately reinstate the full claim when i sent a letter pointing out that he could not assess the claim as he had not even opened the bags.

    I am afraid I have no faith in their impartiality.

    Report on 09 February 2011  |  Love thisLove  0 loves
  • amwell44
    Love rating 39
    amwell44 said

    Bad adjuster, phildude, probably a trainee who proved he had no aptitude and was fired accordingly. Any experienced adjuster could tell you loads of real-life stories that would soon have you on their side. A fascinating job, in fact, but also stressful.

    Report on 10 February 2011  |  Love thisLove  0 loves
  • sloan1874
    Love rating 0
    sloan1874 said

    I'm currently in discussions with my insurers over severe damage caused to my kitchen by faulty work done by the previous owner. I'm now told that I'm not covered because faulty worksmanship isn't included in the policy. I find it difficult to believe that I'm having to take the punishment for somebody else's unwillingness to employ a decent tradesman. Surely insurance was made for this very sort of situation?

    Report on 25 April 2011  |  Love thisLove  0 loves

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