Home insurance is an essential whether you own or rent. To help bring costs down, check out this handy guide.
What do you need?
Home insurance comes in two parts: buildings insurance and contents insurance. Buildings insurance, as the name suggests, covers the building itself – it’s there to help out if there is some serious structural damage to the property. If you are the freeholder, then you will need this, but if you’re only the leaseholder of your property then you don’t need to worry about buildings insurance.
Contents insurance covers the contents of your home, and is an essential bit of cover for everyone.
Many insurers advise that you pay for both your building and contents insurance with same firm to save money, but it doesn't always work out cheaper. Be sure to get quotes for separate buildings insurance and contents insurance as well as joint cover.
Insure the right amount
One of the most obvious ways to cut the cost of your home insurance is to lower the amount of cover you have. But you should never be tempted to value your contents for less than they are worth.
When you go through your home, make sure you cover all of your possessions. Don’t forget the attic, the garage and the garden shed.
Should you need to make a claim, your house may be assessed by your insurer and it’ll only pay out the amount that you’re covered for. If it decides that the amount insured isn’t enough to cover what was in your home, your insurer will ‘apply average’ to a claim, thus reducing its liability.
This is calculated by the sum insured, divided by the true value of the risk, multiplied by the loss. The payout that you would actually get may be significantly less than what you were expecting.
Although it’s less likely, try not to over-insure either. Of course all of your contents will be covered, but you’ll be paying more than you need to in premiums which is a bit counter-productive.
As for buildings insurance, remember you only need to cover the cost of the rebuild, not the market value of the property.
Increase the excess
Increasing the voluntary excess on your home insurance will lower your premiums. Do think twice about how likely it is that you’ll claim though as it can put a heavy dent in your finances.
Loyalty doesn’t pay
Home and car insurance are the worst culprits for exploiting loyal customers. Whatever you do, don’t simply automatically renew. Your premiums will rocket in your second year.
Insurers give the best deals to new customers to entice them. After the introductory offer, existing customers get pushed aside on onto higher rates.
You’ll receive a letter about three weeks before your existing policy is up. Don’t ignore it - take the opportunity to have a look for better deals and switch ASAP. But if you like your current insurer, contact them to see if you can haggle a better deal after you’ve had a browse.
Fit some high security locks, install an alarm and get two bolt locks for the windows: it’ll bring your premiums down.
If you’ve just moved house it might also be an idea to get the locks changed as you can’t be sure who still has a key.
It may be worth joining a Neighbourhood Watch scheme as it can reduce costs too.
Most comparison sites will allow you to compare home insurance quotes. Be sure to use a couple of different ones, as they may not have deals with the same insurers.
Think twice before claiming
Take a moment and carefully consider whether or not you should make a claim. If it’s a minor issue you’re probably better off getting it fixed yourself - making a claim will push up the cost of future cover.
However, this shouldn’t be the main grab when choosing a home insurer - just a bonus. Find the right policy for you, and then see if you can make some extra cash via a cashback site.
Don’t pay in instalments
Pay it all off in one if you can. Insurers will allow you to pay in instalments, but you'll get charged interest for doing so. If you really need to spread your payments, consider putting it on a 0% credit card. Read The best 0% purchase credit cards and The best 0% balance transfer credit cards.