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After you've bought your own home, made improvements,
enhanced the value and furnished it with expensive items, your mind should
be turning to how you would replace your self-built empire should the
worst strike.
We are all aware of the dangers presented to our property
and belongings by Storm, Flood, Fire and Theft, but still a fair proportion
of us will not have insurance. We can do very little to avoid some of
the disasters already mentioned, but we can make provision to replace
them.
Household insurance may not be as expensive as you first
thought. You need to assess which kinds of cover are relevant, desirable
and essential. It is not unusual for people to be paying excessive premiums
for the incorrect cover.
Buildings Cover
Buildings insurance is an essential item for all homeowners,
especially if you have taken out a mortgage. It is normally a condition
of the loan that the property is adequately insured. If your property
is leasehold then the freeholder is likely to arrange this for you with
you reimbursing the cost.
The amount that your property should be covered is not
always the commercial value of the property. This is due to property sale
prices including goodwill and local market forces. A purchase price can
be far in excess of the rebuilding costs. Buildings Insurance should be
designed to help you cover the materials, labour and professional fees
that you would need to meet in rebuilding your home.
Standard Inclusions
- Fire
- Explosion
- Lightning
- Earthquake
- Storm
- Tempest & Flood
- Riot
- Malicious damage
- Collision / Falling Objects
- Theft / Attempted Theft
- Subsidence
- Surveyors' fees
- Escape of Water
- Escape of Oil
- Accidental damage to cables and underground services
- Accidental damage to Glass / Sanitary fittings
- Alternative accommodation
- Owner's liability
- Personal liability
Contents Insurance
Contents insurance is important for homeowners and tenants.
There is not normally a mortgage condition relating to contents cover,
but it is strongly advisable. Most policies will cover your valuables,
replacing the old for new. This means you should calculate the level of
cover on the replacement cost of your possessions and not on the current
value. Any valuable items should be specifically mentioned to the insurer,
as they may require a certificate to prove the value. Some policies will
have a single item limit i.e. £2,000 before your need to disclose.
If you regularly take valuable items out of the home
you may feel inclined to insure against loss or theft. Most policies have
this facility but will charge extra due to higher risk.
Common Inclusions
- Fire
- Explosion
- Lightning
- Earthquake
- Storm
- Tempest & Flood
- Riot
- Malicious Damage
- Collision / Falling Objects
- Theft or Attempted theft
- Subsidence
- Freezer failure
- Money held at home
- Contents away from home
- Escape of Water
- Employers Liability
- Tenants Liability
- Personal Liability
- Alternative accommodation
- Escape of Oil
- Automatic increases for Christmas and weddings
- Key replacement
Accidental Damage
Both Buildings and Contents cover will commonly offer
the facility to guard against accidental damage. This will mean buildings
cover against accidentally placing your foot through the ceiling or if
someone drives their car through your front room. Contents policies would
guard in case you drop a valuable vase or spill paint on the carpet. Obviously
this type of cover will cost more than the standard.
Saving Money on Your Premiums
Most household premiums are calculated using number
of bedrooms, local postcode and the amount of claims you have had in the
last five years. The more comprehensive the policy, the higher the premium
naturally.
Some give discounts based upon additional security or features. Some are
easy to install and the savings could be worth the effort.
Common Discounts
- Approved Burglar Alarm
- Neighbourhood Watch
- Smoke Alarm
- Dog Owner
- Non-smoker
- House Occupied During the Day
Sublet Property
Please remember that nondisclosure of a tenant could
invalidate your insurance. You should disclose any tenants and specify
if they are a Student, Professional, DSS Tenant or if the property is
let for holiday accommodation. You will be charged higher premiums but
it is pointless paying lower premiums into a plan that won't pay out.
In Doubt?
If you are in doubt about the level of cover you should
obtain then seek advice. Speak to a financial adviser, insurance broker
or the surveyor that is valuing any potential property purchase. They
will be able to offer guidance. If you happen to be under insured at the
time of claim the company will only pay out a proportionate benefit.
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