How
much does home insurance cost?
home insurance
Be
savvy and you can find cheaper
home insurance
Your home and its contents may be an important
investment of your life, but protecting them
from risks such as theft, fire, subsidence,
floods and storm damage needn’t break
the bank. Here we look at how much home insurance
typically costs and how you may reduce premiums.
How
much will you pay for home insurance?
According to
the AA British Insurance Premium Index, the
average quoted premium for buildings insurance
rose by 9.8 per cent from October 2008-2009
to just over £227. The average contents
insurance premium meanwhile has dropped by a
few pence compared to the same period last year
to an average of £125. Those taking out
buildings and contents insurance combined will
pay an average of £298.
Money can be
saved by shopping around and this is reflected
in the AA’s shop-around index which averages
the lowest three premiums for each customer
to give a more realistic impression of the quotes
they can obtain by comparing policies. The average
shop-around premiums were: buildings insurance
£130; contents insurance £67; and
combined policies £192.
What
will you get for your money?
There are two
forms of home insurance:
- Buildings
insurance: This covers the structure of your
home and its permanent fixtures and fittings.
Some policies will also include outbuildings,
as well as underground pipes, cables and glass
in doors and windows. Typically a buildings
insurance policy covers damage caused by floods,
subsidence, fire, theft, storms and malicious
damage. Most mortgage lenders make it a condition
of their lending criteria that you have buildings
insurance in place. It is important to remember
that you can obtain your buildings insurance
on your own and you don’t have to accept
the cover your mortgage provider recommends.
- Contents insurance:
This protects all the possessions in your home
that are not permanent fixtures and fittings
– including carpets, curtains, clothing,
electrical items, furniture and more. Typically
policies will protect these items against risks
such as theft, water leaks, explosions, flooding
and fire.
Crucially, not
all home insurance policies are the same which
is why it’s vital to compare cover as
well as price when you’re shopping around.
Check policies for exclusions – circumstances
for which an insurer will not offer a payout.
Also look to see what additional protection
is available – sometimes for an added
premium. These optional extras may include accidental
damage cover, legal expenses cover and home
emergency cover.
So
how can you reduce the cost of home insurance?
Insurers base
premiums on risk – i.e. how likely you
are to make a claim. This takes into account
a number of factors such as your claims history;
your personal circumstances – your occupation,
your marital status etc; and your address –
is the area you live in prone to flooding or
in a high crime area?
By reducing
the risk level you pose to an insurer you can
cut your premiums. Actions to consider include:
Changing your
locks: Most home insurance companies offer discounts
if you fit approved locks – normally five-lever
mortise locks on doors and key-operated window
locks. Getting to know your neighbours: Discounts
up to five per cent are available if you live
in a Neighbourhood Watch area.Increasing security:
Many insurers offer discounts if you fit various
security devices such as burglar alarms; time-switch
lights; external security lighting; CCTV cameras;
and more. Consult your insurer about which devices
offer the largest discounts.Increasing your
voluntary excess: This is the amount you agree
to pay towards a claim on top of the compulsory
excess that is set by some insurers. The higher
the voluntary excess the lower your premiums
will be – but only set it at a level you
can comfortably afford in case a claim is ever
necessary.Preventing house fires: Fitting smoke
alarms and fire extinguishers to prevent house
fires getting out of control could reduce your
premiums. If you’re a smoker, consider
quitting as it could save you money on your
insurance.
Before buying
home insurance consider which policy options
are important to you – you may decide
that you don’t need certain elements of
cover. For example, if you live alone, and therefore
don’t have to worry about children or
pets knocking valuables over, you may decide
you can do without extended accidental damage
cover.
Once you have
decided on the right level of cover for you,
use a comparison website to compare the deals
available. Most insurers offer their cheapest
deals online as this saves them money on overheads
– some companies offer online discounts
ranging from 5 to 15 per cent. The leading comparison
websites allow you to compare the deals available
from more than 50 insurers with one search so
you can be more confident about finding a competitive
quote.
You may also
be able to save money by combining buildings
and contents insurance with the same provider;
and by agreeing to pay premiums annually instead
of monthly to avoid interest charges.
|
