Should I pay extra for accidental damage and legal cover on my home insurance?

Ceri Stanaway
21 February 2020

Moneywise has crunched the numbers and scrutinised the small print of common add-ons that insurers offer to help you work out whether it is worth paying for extra cover

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Home insurance is designed to shield you from the full financial impact of problems with your property or the belongings within it. Yet while most policies will pay out for damage or loss caused by catastrophes – flooding or a burglary, for instance – you may find some surprising omissions. Many basic or standard contents insurance policies will not, for example, cover you for spilling red wine over your white carpet or sofa.

Cue home insurance ‘add-ons’ – optional extras that you can tack on to your core policy, usually for a fee. Some are enhancements to cover provided by the home insurer – protection for items outside the home or for that red wine spill. Others, such as home emergency and legal expenses cover, are separate policies that are often provided by third parties. 

Moneywise has summarised common home insurance add-ons, examples of costs (see table, over the page) and whether they are worth considering. As with all insurance, exclusions may apply – some are add-on specific, but in general look out for the following:

Excesses: the amount you must pay towards a claim. High excesses may eat up a decent chunk of the value of any claims.

Doubling up on cover: not only could this mean paying twice unnecessarily, but many home insurance policies have a general exclusion for anything insured by another policy. 

One alternative to paying for add-ons is to pop a few pounds into a dedicated savings account each month, although some risks may be prohibitively expensive to self-insure. Many insurers also include some add-ons as part of their ‘premium’ policies, and our analysis shows that this option can sometimes work out cheaper than paying for several different add-ons to a standard policy.

Sometimes your home insurance policy may cover some unexpected bonuses, so keep an eye out for them. Some contents insurance will cover the belongings of a child while they are away studying; LV=, for example, covers contents at university or college up to £10,000.

Accidental damage

This covers you for accidents in the home that damage the property or your belongings. Most accidental damage is not covered as standard – at best, insurers may cover selected items, such as audiovisual equipment. If you want full protection, to cover the cost of drilling through a pipe or a paint-smeared child wreaking havoc on your furniture, you may need to pay for buildings and contents add-ons.               

Catches to watch out for

Check whether you will get new-for-old cover, which means you will get the full cost of replacing the item, or whether deductions will be made for wear and tear. Also find out if your insurer will replace undamaged parts of a matching furniture set.

Pet-related exclusions: you will probably be covered if your dog’s tail wagging smashes a valuable vase, but chewing, scratching and fouling are usually excluded.

What’s the alternative?

You could take out a protection policy with a retailer or manufacturer to cover specific items when you buy them, but these policies can be pricey.

Adding both contents and buildings accidental damage increased the cost of cover by around £30 on average, across the insurers we looked at.

Is it worth it?

One couple we spoke to were grateful for their cover after a curry spill on their cream sofa and carpet, which their insurance policy paid to replace.

But if you are willing to put up with the odd stain, have few valuable, breakable items, and your pipes are in no danger from DIY, you may not think it is worth making a claim.

Personal possessions

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Also known as an ‘all risks’ extension, this extends contents insurance to cover loss, theft or damage outside of the home.

It typically covers wearable or portable items, such as handbags, jewellery or tech gadgets. Costs will depend on how much cover you choose.

Catches to watch out for

There may be a per-item cap (£1,000, say). For an extra fee, you can ask your insurer to extend cover for specific, high-value items, such as jewellery.

There are likely to be exclusions if the insurer thinks that you have not taken appropriate security measures – for example, by

leaving items on display in an unattended vehicle.

What’s the alternative?

You can buy standalone insurance for each item, such as gadget or mobile phone insurance, but it can be pricey. Insurer ProtectYourBubble, for example, quoted £12.49 a month (£150 a year) to insure an iPhone XS 64GB for loss, theft and damage. Its policy also includes breakdown cover, which add-ons may not include.

Travel insurance will, of course, cover belongings while you are away on holiday. 

Is it worth it?

Adding £2,500 worth of cover bumped our premiums up by around £15 a year on average.

When the cost of the latest high-spec smartphones can easily reach £1,000, before you even take account of your other belongings, personal possessions cover could be a cost-effective way to reduce the shock of a loss or theft.

Legal expenses

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This covers the cost of legal advice and representation for disputes, incidents or claims made against you, or vice versa – such as personal injury claims, or disputes with a neighbour, tradesperson or employer. 

You will usually be covered up to a maximum of either £50,000 or £100,000          .

Catches to watch out for

To take up (and continue with)  a claim, insurers commonly state that they must think there is a reasonable chance of it succeeding (some refer to at least a 50% chance).

If your case is accepted, you will usually have a lawyer appointed by the insurer, rather than being able to choose one. It will not cover all areas of law – for example, family, conveyancing or criminal cases.

What’s the alternative?

You could instruct a lawyer to take on your case as and when you require one. Some firms offer this on a ‘no win, no fee’ basis.

However, the ‘no fee’ aspect may only apply to your legal firm’s fees, and not to other expenses – such as court costs, or the other side’s legal expenses if you lose.

‘After the event’ insurance can be taken out to cover these costs, but it can be expensive.

Some serious cases – such as discrimination against you – may qualify for legal aid – visit Gov.uk/legal-aid. 

Is it worth it?

The leading insurers we looked at charged an average of around £25. While it is unlikely you will need it, if you do the value is likely to be high as legal expenses can often escalate.

You may feel it is worth it for peace of mind – just make sure you read the small print and understand what you are buying.

Home emergency cover

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While home insurance usually pays out for problems caused by home emergencies – redecorating damaged walls after a burst pipe, for example – it usually won’t pay for the initial cost of dealing with the emergency. For that, you need home emergency cover. Depending on the policy, problems that might be covered include broken boilers, pest infestations and electrical faults.  There is usually no excess to pay.

Catches to watch out for

Details of what is covered can vary significantly; so check policy documents carefully.

There are relatively low levels of cover per emergency – £500 isn’t uncommon. This may not cover the cost of replacing a broken boiler, for example.

What’s the alternative?

Standalone cover from the likes of British Gas and Homeserve. When we checked, British Gas’s policies ranged from £150 a year for its most basic policy, covering boiler and a boiler service, to £270 a year for this plus central heating, plumbing, drains and electrics. Unlike home insurance add-ons, there were no obvious limits on cover for repairs (although, as with the add-ons, exclusions applied – such as for replacing boilers over a certain age).

Is it worth it?

Home emergency cover is one of the pricier add-ons, increasing cover in our scenario by between £45 and £76. Check for insurers that already include it – Legal & General, for example, includes it as standard in both its levels of cover.

A home emergency add-on is likely to cost less than a standalone policy, as long as you are aware of its limitations. However, FCA stats show, as of 2018, the claim frequency on home emergency as an add-on was only 6.1% a year, with average payouts rarely above £300 – on average, that means one claim once every 16 years. Assuming typical annual costs of £60, that means you could spend more than £900 before making a claim, which might only pay out up to £500.

Those with standalone home emergency cover claim on it much more frequently – 68% per year.

Bike add-ons work out cheaper – but watch out for catches

Many contents insurance policies offer some pedal bike cover as standard, within and sometimes outside the home – but watch out for catches. For example, cover may be capped at a fairly low level – typically £500 or less. More expensive bikes will usually only be covered if you buy an add-on. You can also get standalone bike cover, which may be better for very high-end bikes or if you race competitively.    

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Jill Starley-Grainger and her husband, Tim, usually add their bikes to their home insurance. She says: “Alas, we have had to claim on this a fair few times, despite having several expensive locks on the bikes.

"It's been well worth it, though, because it's cheaper than any alternative we could find, and typically adds only a few pounds a year to our premium."

However, Amanda Martin* is not a fan, as she told Moneywise: “My husband added his bike to our insurance and it was later nicked. The insurer would only give him Halfords vouchers – and the shop didn’t sell the make of bike he wanted.

"The insurer wouldn’t back down, so my husband had to settle for something he wasn’t entirely happy with, and using our own cash to buy the bike he wanted elsewhere. We’ve never insured a bike since.”

* Name has been changed

Selling add-ons – the rules

In 2014, the Financial Conduct Authority (FCA) found that the selling of add-ons often led to consumers making poor-value purchases. This is because it tends to be quite difficult to compare the price of add-ons offered by insurance providers because they are only offered at the end of the purchasing process.

It is generally reasonably straightforward to compare the headline price of home insurance – a comparison website can do it for you. However, to compare total prices that include all the extras you want, you would have to enter all your information several times – and most people do not do that. 

As a result of its findings, the FCA implemented the following:

A ban on ‘opt-out’ selling of add-ons – extras that you purchase by default, unless you specify that you do not want them. This ban includes any that are free for the first year but will or may become chargeable at renewal.

A requirement for companies to provide timely and appropriate information about add-ons during the sales process.

The regulator has also kicked off an initiative requiring insurers to report stats demonstrating the value of various insurance add-ons, including home emergency cover, such as how often people claim and how often the claims are paid. 


 

Legal Added on to home insurance

I have had taken out legal cover on two home and contents insurance and on both occassions i found my self arguing with the insurer and an agent they passed my claim on to, to see if they could help the insurer get out of my claim i new i had a claim, but they wanted me to tell them that i had a claim and explain why i felt i had a claim....they never even listened to me...i was insured under the documents but then another company squashed my claim...please be careful, even over the phone i gave me details and they changed my details on the policy to suit them selves..now i record conversations!! So much fraud out there, with these big companys...that can get high powered lawyers" and you the consumer can not get one!!!

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