Home Insurance – What is it Worth?

Our homes are one of our most valuable possessions – not simply from a bricks and mortar perspective, but all the contents, memories and comforts that it holds within.

Despite putting the best security measures in place to protect it, there are many factors outside of our control that can impact our lives and destroy our homes in more ways than one. With the average home containing contents worth in excess of £35,000, a home insurance policy costing a few hundred pounds would seem a good investment. However, statistics show that of the 22.6 million homes in the UK, 6 million do not have any form of home insurance. According to Direct Line, as many as 3.1 million people have had uninsured items lost, damaged, or stolen, at an estimated cost of more than £14 billion.

In this article, we look at the various types of home insurance and what to consider when taking out a policy.

TYPES OF INSURANCE

While policies vary, home insurance will usually cover you for damage caused by falling trees, storms, flooding, escaping water, earthquakes, fire, lightening, explosions, thefts, riots and vandalism. Most will also cover against subsidence. Acts of terrorism, however, are not included.

Contents insurance

This covers you against damage and theft to your personal belongings that are kept in your home, garage or shed. Some policies will cover new for old, others the current value (indemnity cover) and some offer add-on cover, which can also insure items such as watches and jewellery when taken outside your home.

Buildings Insurance

This protects the structure of your home as well as permanent fixtures and fittings, such as baths, basins and showers.

Combined Buildings and Contents Insurance

This cover is only suitable for those who own the freehold of their property. If you rent or are leasehold only, the building contents element should be arranged by your managing agent or landlord. Contents however is everyone’s own responsibility.

Both types of policy will also give you, as the legal owner and occupier, legal liability protection – this means that if a visitor to your property is seriously injured, and it is deemed to be your fault, the insurer will cover you and your legal costs. A buildings policy will also do the same if a passer-by or neighbour’s property is injured by the structure.

THE SMALL PRINT

Damage due to wear and tear is not covered. Policies may also be invalid if you are away from your home for more than 30 consecutive days during the year or if you sub-let your home and it is burgled and there are no signs of forced entry.

Just because you have a policy it does not automatically mean insurers will pay out. Most policies will impose an upper limit for certain items, typically ranging from £1,000 – £2,000. Research has shown that Britons have £222 billion worth of high-value collectibles in attics and cupboards but nearly a quarter (23%) don’t have these items insure, leaving a massive £88 billion insurance gap for high value items, which are uniquely vulnerable to theft and loss.

TIPS FOR GETTING THE RIGHT COVER

• Do not over cover buildings insurance – many people make the mistake of taking over cover for the resale value if their home rather than the rebuild value, which is likely to be less. To find the accurate rebuild value, you can pay for a survey, however you can also gain an estimate using an online calculator.
• Do not under cover contents – as mentioned above, many policies will have item limits, so it is important to list any high value items separately, for example, jewellery, watches and high-end tech such as laptops and specialist cameras. For valuable bicycles, or if you have lots of valuable gadgets, it may be worth considering specialist insurance. Expensive items bought after the policy was taken out may not be covered. You should also add up smaller value items, such as clothes, on a new for old basis. Most insurers will cover on a proportional basis – so if you have £50,000 of possessions but only insure half of that, if you make a claim worth £10,000, they will only pay £5,000 if it.
• Keep receipts for valuable items – insurers will usually want to see proof of purchase before paying out. Very expensive items, such as antiques, paintings and unique jewellery, should be professionally valued. This should be repeated at certain intervals, as these types of items can increase in value.
• Never auto-renew – new customers usually get the best deals so, although it can be a laborious task, it is worth looking to see who offers the best value cover each year. Research by Citizens Advice revealed that those who stayed with the same insurer for five years could pay 70% more than those who switched.
  Buy early – it has been found that buying your home insurance cover three weeks before you need the policy to start can save you more than 20% compared to leaving it to the last minute.
• Under Lock and Key – investing in good window and door locks can bring your premiums down. A five-lever mortise deadlock can cost as little as £25 to buy, yet a premium for a house without them can add £50 a year to a policy premium.

At Finura, we can audit your current personal and work insurance and provide solutions to ensure that you and your family are comprehensively protected. We always make sure to set up any insurance in the most tax efficient and cost-effective way available. Where possible, we only use insurance services that have been awarded a 5-star Defaqto rating.

If you would like a review of your current insurance policies, please contact Finura.

Articles on this website are offered only for general information and educational purposes. They are not offered as, and do not constitute, financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional.

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Sources:
https://www.moneysavingexpert.com/insurance/home-insurance/
https://www.moneyexpert.com/news/britons-222-billion-collectibles-quarter-dont-insured/
https://www.finder.com/uk/home-insurance-statistics