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Few insurance policies come bigger and more important than home insurance. After all, few items in life are as expensive or essential as your home.
In this guide we’re looking closely at home insurance and how you can avoid any unnecessary charges and costs by being well informed on all the various technicalities, features, exclusions and jargon that you come across when arranging a home contents or buildings insurance policy.
Also we want to alert you to the home insurance aspects which are most critical if you’re not to lose out in terms of compromised pay-outs if you’ve overlooked certain criteria in the lead up to a claim being pursued. Or even worse, unwittingly putting yourself in a position which could mean that you’re not compensated whatsoever in the event of a major – and unforeseen – household catastrophe.
Both over and under-insuring your home could have dire consequences should you ever need to claim for a rebuild, potentially leaving people severely out of pocket simply by not knowing what are, in effect, the simple facts of the matter before arranging a home policy.[/nav-text]
On this note, the following 15 points address the pivotal features of any home policy, and essentially make the world of difference between a successful household claim and an unsuccessful one, if you ever find yourself in the unenviable position of having to make one.
1. Accidental Damage
Almost always an add-on feature that home policyholders need to stipulate as an optional extra at the point of sign-up to general household cover, accidental damage extends to safeguard against damage caused by accidents which can and do result around the home on occasion.
These tend to include breaking an item of furniture, forgetting to switch a tap off and so on. Very much a must-have, as any home insurance expert will tell you.
2. Personal Possessions Cover
An optional extra on a significant number of typical home policies today, personal possessions agreements provide a more blanket-like coverage in terms of individual belongings of monetary value.
Think smartphones, laptops, tablets and other handheld and portable devices you regularly use outside of the house as much as in it. For an additional cost this affords the policyholder a greater peace of mind.
3. High Value/High Risk Items
Traditionally reaching above and beyond the remit of standard household coverage, a dedicated high risk element added to a normal home insurance policy will guarantee that items such as expensive TVs, laptops, tablets, watches, jewellery, art etc… will be protected in the event of any damage/loss/theft occurring.
It may just be worth your while to seek separate cover altogether if an item is worth a considerable amount, so much so that it increases a standard premium to unprecedented levels.
4. Sub-letting Rooms
If you’re planning on sub-letting a room in your home, then standard insurance policies will not normally embrace such features; therefore it will be necessary to let your provider know in advance when agreeing to household cover, or conversely, at the point if and when someone moves into your property.
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5. Home Business
If you neglect to inform your home insurer that you’re either running a business or trading from the insured property then you could risk having a later claim rejected due to not keeping your provider in the picture.
Our advice would be always to remain transparent when it comes to things like this, and be so from the outset; essentially you might well need to arrange a different type of home insurance package.
6. New for Old v Indemnity
Should a household claim be put in at any point, there will be the two differing compensation varieties offered by a home insurance provider.
Essentially the choice will be between ‘replacing your pre-existing items with new’ (new for old), and which takes no reductions for wear or tear; or ‘indemnity cover’, which in a nut-shell involves being compensated for the perceived financial value of the damaged/lost/stolen item(s), which will take general wear and tear into the calculations.
7. Property Security
Referring to locks, windows and burglar alarms chiefly, in home insurance policy parlance property security amounts to the provision of detailed descriptions of various home securing measures and safety features found within the policyholder’s home.
Failure to submit the correct information could again result in a claim being denied in the event of the pursuing of one. Of course, simply having locks, windows and burglar alarms fitted and prominent in a property isn’t enough, because if you don’t remember to safeguard the premises in every conceivable way when it’s vacated then your home insurer has the right not to recompense you should the worst happen in your absence.
Effectively many household policies stipulate (via a special clause) that the provider will only honour a break-in whereby force or violence has been used to gain unlawful entry into a property. Absent-mindedly leave a window ajar and become a victim of an opportunistic thief and the chances are the insurer won’t cough up.
8. Bedroom-rated, Sum Insured and Unlimited Sum Insured
Basically the triumvirate of historically tried and tested methods used by insurers to determine the monetary level of home cover required from the get-go.
The former refers to the insurer establishing the amount of cover required based derived from the number of bedrooms found within the property, the latter means the financial sum by which all contents are covered without limit. Whilst the middle option, ‘sum insured’, allows the policyholder to ascertain the level of content cover needed.
This is of particular importance for those who opt for ‘sum insured’ household policies where the homeowner defines the level of insurance they require. And which could – and often does – end up with the insured party ostensibly underestimating the value of their home’s contents; which subsequently can have a drastic knock-on effect in terms of a claim amount which might be forthcoming from the insurer.
To put it into some form of perspective, imagine you have arranged £20k of home contents insurance cover (believing the collective items to be worth in the region of this), yet it later materialises that the contents (in pre-destroyed condition) were actually worth in the region of double that on the open market (say, £40k). Should a £5k claim be submitted following a burglary, the chances are that an insurer will only pay-out a sum of £2,500; arguing that only half the cover that should have been was in place at the time of the recorded incident.
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10. Data and Download Losses
You might not automatically think it on face value, yet your collection of downloaded movies and music might be worth a half-decent amount of money; however not all home insurance providers extend their range of household cover to take this modern phenomenon into account and often neglect to provide suitable cover for digitally-owned material. Which would mean it was the responsibility of the policyholder to ensure that the additional feature to safeguard this virtual interest was in place.
11. Home Emergency
Another imperative addition to ANY household insurance policy in our book (although some policies do offer it as standard from time to time) is the inclusion of home emergency cover; which effectively bridges the gaps when things take rapid turns for the worse, such as your boiler breaking down, lost keys and plumbing issues which suddenly crop up without any forewarning.
Many home insurance providers offer 24 hour helplines which are absolutely essential should a homeowner be subjected to emergency situations unfolding.
Overlook these at your peril, as the exclusions set in stone in a home insurance plan could make all the difference if you find yourself pitched into previously unchartered territory.
It’s vital that homeowners read what is and (more importantly) what ISN’T covered in a household policy before they ratify an agreement, just in case there’s an aspect you’re not sure about or elements which you already know you want peace of mind coverage for.
Two of the most common exclusions found in home policies are ‘ongoing pollution’ and ‘damage caused by DIY exploits’. Don’t say we didn’t warn you in advance!
13. Rebuild Value
Hugely important factor to consider from the outset and which can often be misunderstood if not fully in the knowledge loop.
Basically, if you’re arranging buildings insurance then you will need to estimate just how much it would cost to rebuild your home from the ground up.
Often mistaken for the market value of a property, rebuild value needs to be assessed from the get-go and is typically less than the market valuation for the simple reason (amongst others) that it doesn’t take into account the cost of the plot/land on which it’s constructed. This information if normally presented on your mortgage valuation report, deeds to your home or on any previous surveyor’s report, but having said that you’ll obviously need to increase the figure so that it acknowledges inflation and factor in any improvements made.
An expensive alternative option would be to enlist the professional services of a chartered surveyor to provide a new estimate, whilst the household insurer’s T’s & C’s may specify exactly what method needs to be used.
14. Vacant Property
Please note that homes which stand empty for a period of time aren’t protected by standard household insurance coverage, which can of course cause a few headaches should you be in the throes of still selling your previous property while settling into your new abode.
Don’t fear though, as help is at hand courtesy of specialised ‘unoccupied home insurance’ which can be made use of in such extra-curricular circumstances.
15. Flood Risk
Ever-changing flood mapping here in the UK can quickly alter pre-existing boundaries with regards to home insurance, especially if you reside in an area historically prone to flooding.
Thankfully 2016 saw the launch of the much-anticipated government-supported Flood Re scheme , which aims to ensure that insurance remains affordable for those living in flood-hit areas.
That said, it will be up to individual household insurance providers to accommodate certain homes in this initiative, so you will need to contact your insurer to determine whether or not your property qualifies.