Insuring our homes, contents and belongings may seem like the easiest task, if you are to believe everything you read online or see on TV adverts.
Sadly, this isn’t necessarily the case, as not all policies are the same. Finding a reputable insurer or broker is imperative. Good deals are not necessarily the cheapest. But while the ‘cheapest’ option may seem like you’re getting a bargain, would you be adequately covered? More than likely not.
So what are the most common mistakes people make when insuring their homes? Read on to find out…
The sum you insure your building for needs to fully reflect the rebuild cost should the unthinkable happen. The costs of clearing rubble and debris, rebuilding and full refurbishment can be huge! The market value of your home is not necessarily a guide to the sum insured you need. Talk to an expert if you are in any doubt.
Rebuild costs are only the part of any insurance claim. Again, the sum insured should reflect the replacement costs of all your contents and possessions. Although time consuming, it is a worthwhile exercise to go room by room and list the costs of everything contained therein. You then need to add a bit of a contingency for things you may have missed or undervalued. You will be surprised to learn how much your possessions are worth!
Getting caught out by ‘condition of average’ clauses
Many property owners have been caught out by this relatively little known clause. Here’s how it works:
If a fire were to damage a property causing repair costs of £100,000 and the building is insured at a reinstatement value of £1million, you would assume that you have more than enough cover.
However, if the insurer establishes that the cost of the rebuild is £1.2million, they can potentially claim that there is not adequate cover in place, and then reduce the claim via the ‘condition of average’ clause. The claim can be reduced by the same ratio as the amount of under-insurance.
Some insurers include Accidental Damage cover as standard, but others will only include it upon request and for an additional premium. Be specific in what you want covered, and make sure you are clear on what is covered as standard.
Not declaring Valuables
Your policy may contain a single article limit for anything deemed as valuable. Your insurance company may well insist that high value items are specified on the policy schedule and may also insist that items such as jewellery are kept in secure storage, such as a safe.
Buying cheap policies
Insurance policies vary so much that you should seek professional advice to make sure you have the cover that is specific to your needs. There are many factors to consider when buying insurance for your home and contents: What happens if your home is destroyed in fire and uninhabitable? There needs to be provision for alternative accommodation. Are your garden items and equipment covered? How about the contents of your shed? Does your family own bicycles and are they covered in your schedule?
Insurance is not always as straightforward as you might think. As long as your chosen insurer is regulated by the FCA or equivalent body, dodging those avoidable mistakes should make your policy term less stressful, even in the event of a claim.