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 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.
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.
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.
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.
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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