Get the cheapest home insurance that still matches your needs
A new piece of research from the Association of British Insurers (ABI) and YouGov found that 22% of people have ditched their home insurance, while 17% have cancelled their buildings insurance. Scotland is the worst region, with 28% of people admitting they no longer have any home insurance in place.
The figures have prompted concern among insurers, as failing to have home insurance in place could leave homeowners and renters at risk if they are burgled. Failure to have buildings insurance, meanwhile, means any flooding or fire damage, for example, could leave them financially exposed.
“Cutting back on insurance protection is a false economy,” says Stephen Haddrill, director general of the ABI. “In these uncertain times, insurance provides a vital financial safety net to steer individuals and families through the recession, as well as helping to provide long-term security."
Cutting the cost of home insurance
1. Shop around
Like most insurance products, home insurance is generally cheaper for new customers so sticking with an insurer won’t necessarily pay. Use comparison websites to find the cheapest policies but make sure you read the small print to ensure the product is right for you.
The following comparison sites provide the biggest coverage of the market (no one covers all the market so it may be worth your while checking more than one):
There are other smaller quote sites around but a combination of the above will give you the most competitive quote most of the time.
It’s also worth contacting some insurers directly as several, including Aviva and Direct Line, do not use third-party websites.
2. Don't over-estimate rebuilding cost
Many people mistakenly supply the market value of their home to the insurer, rather than the amount it would cost to rebuild your home from scratch. Confused.com estimates that an incorrect re-build cost could result in your paying 20% more for insurance, because the market value tends to be the higher of the two costs.
You can find your re-build cost on your original mortgage documents. Or many property and price comparison websites offer a special calculator powered by BCIS (Building Cost Information Service).
3. Don't cover your possessions for accidental damage
This likely to increase your premium, as is extending the policy to include protection for items away from the home.
“For most people, home insurance is a safety net to cover them against the very worst rather than to protect them from, for example, wine stains on carpets,” says Darren Black, head of home insurance at confused.com. “If you are very unlikely to claim for accidental damage it's probably not worth paying for it.”
4. Make sure you are on the electoral register
This may also affect your premiums. When you apply for home insurance, the provider may well check your credit record in a similar way that banks do when you apply for credit.
While this will be a ‘soft’ check, and won’t leave a ‘footprint’ on your credit record, if the insurer sees you aren’t on the electoral role it may classify you as high risk and bump up your premium.
5. Upgrade your security
Joining your local neighbourhood watch scheme might reduce your premium slightly - even better, according to Confused.com fitting a burglar alarm could shave 5% off your premium.
Also, check your locks to see if they have the British Standards Kitemark - this means they conform to the insurance industry’s standards and could afford you a discount.
6. Don’t double up on insurance
For example, there is little point in paying for mobile phone insurance if this is covered as part of your home insurance policy.
7. Make sure your insurer is trustworthy
There is no point paying for cover and then running into difficulty when you need to claim. Some providers are simply more willing and able to meet their customers’ needs. It is difficult to know who to trust which is why we ask real customers to rate their providers once a year – see the insurers most trusted by their customers.
Quick guide to home insurance
There are two types of insurance. The first, buildings insurance, covers your house from any accidental damage that requires building work to be carried out. For example, this might include damage from a fire or vandalism to subsidence or a flood. Homeowners with mortgages are required by banks and building societies to take out buildings insurance.
When buying buildings insurance, the ‘sum insured’ or re-build cost is not the market value of your home but rather the amount it would cost to rebuild your home from scratch. It is also the total amount of money an insurer will ever pay out.
The second type, contents insurance, is available to both homeowners and renters and covers your possessions within your home from theft or accidental damage. Some policies will also protect portable items, such as laptops and cameras, away from the home although you’ll have to pay an additional premium.
You can choose whether to protect your possessions (from clothes to furniture and white goods) from accidental damage as well as theft. You will also need to consider whether to opt for a new-for-old policy that meets the replacement or repair cost of any items, or an indemnity policy that replaces exactly what was there before.
Homeowners can choose whether to buy separate buildings and contents insurance or opt for a combined policy. The latter option is easier to organise and can often be cheaper.
Other things to consider
- If you use your property as a business then you will need to find an insurance policy that covers working from home.
- Do you want the cover to include outbuildings such as a shed or garage?
- Do you want to extend your contents insurance to cover any damage or loss of items that you regularly remove from your home, such as laptops and jewellery?
- Many policies have exclusions, so find out what these are before signing on the dotted line.
- Do you want your contents cover to automatically increase the level of cover around Christmas time to include gifts?
- Do you want your insurance to include any offspring living away from home at university?
- Do you intend to sub-let a room or rent out your house? If you don’t tell your insurer your policy could be redundant.
- Do you want any extras, such as cover for emergency work?
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.
This type of insurance covers the structure and fabric of your property – the bricks and mortar, not the contents (for which you need contents or home insurance). If you have a mortgage, the lender will insist you have a suitable buildings insurance policy in place. Many lenders offer their own building insurance policies, but you don’t have to buy it from your own lender but you have the option of shopping around. The insurance covers you for the rebuilding costs, not the market value of the property.
Association of British Insurers
Established in 1985, the ABI is the trade body for UK insurance companies. It has more than 400 member companies that provide around 90% of domestic insurance services sold in the UK. The ABI speaks out on issues of common interest and acts as an advocate for high standards of customer service in the insurance industry. The ABI is funded by the subscriptions of member companies.