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 is 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 are 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.
Insuring 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. However, 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. Do not 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 pay out that you would actually get may be significantly less than what you were expecting.
Although it is 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.
Increasing The Excess. Increasing the voluntary excess on your home insurance will lower your premiums. Do think twice about how likely it is that you will claim though as it can put a heavy dent in your finances.
Increase Security. Fit some high security locks, install an alarm and get two bolt locks for the windows: it’ll bring your premiums down.
If you have 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 also be worth joining a Neighbourhood Watch scheme as it can reduce costs too.
Think Twice Before Claiming. Take a moment and carefully consider whether you should make a claim. If it is a minor issue you’re probably better off getting it fixed yourself – making a claim will push up the cost of future cover.