There is no better feeling than buying your first new house, exchanging contracts and receiving the keys to your first home.
Up until this point, it’s probably been a long and arduous journey, as it historically is for most of the population, so you’ll be relieved when you can finally move your possessions in, pop the kettle on and put your feet up.
But not so quickly - there’s something very important you might have forgotten.
Yes, home insurance. As you’ll now quickly concur, Dorothy was right all along, there really is no place like home. And as well as it's soon to be the place where your heart resides, it’s also the exact location where you store ALL of your worldly goods.
Everything you’ve ever worked and strived for is distributed around you in a variety of room spaces (although at this precise moment, possibly still in an array of cardboard boxes with illegible words scribbled on the outsides with marker pen).
Now you have a roof over your head, it's time to think about further protection. The word insurance shouldn't fill anyone with a sense of fear - quite the opposite in fact, as home insurance is among THE most important, sensible and far-reaching insurance policy you might ever arrange.
But like any insurance product, it’s where you start that matters, and first-time buyers are confronted with a baffling and overwhelming selection of home insurance options from day 1 - and usually long before they exchange and receive the keys.
Therefore, you need to know your way around the subject and prioritise those insurance policies, which is why a handy Top 10 Home Insurance Tips for First Time Buyers hit-list like this will help!
1. Protect the bricks and mortar
THE single most important component of any home is the bricks and mortar. Unless you live in a hillside hut, former railway carriage or converted shipping container, bricks and mortar are the two main elements holding your dream home together. And if any part of its construct is severely compromised by the largely unexpected advent of storms, earthquakes, flood or any other violent episode courtesy of Mother Nature then as a homeowner you could be left high and dry if you don’t have an appropriate and ideally all-consuming buildings insurance cover.
As well as the very infrastructure of your new home, a decent buildings insurance policy also protects you against any unforeseen damage to fixtures and fittings found within; such as a fitted kitchen or bathroom suite for example.
For most homeowners, buildings insurance won't be optional though, as anyone with a mortgage will be required to have insurance that covers the building from the outset.
2. Don't forget your contents
The highly prized contents of your home such as your all-singing, all-dancing state-of-the-art TV, that Ming vase (as if?!), your ‘on trend’ clothes and those painfully hip Scandi-design era pieces of assorted furniture are NOT protected by your standard-fit buildings insurance policy, and therefore need additional cover in the shape of a dedicated contents insurance plan.
In case you’re not entirely au fait with what items would fall into this category, imagine turning your house upside down and shaking it. Anything which would fall out and land in an unsightly heap on the ground is, essentially, referred to as ‘contents’ and as such requires listing as separate to your buildings insurance.
First time buyers can opt for a combined buildings and contents insurance or elect for individual policies.
3. Do your sums
Staying on the subject of contents insurance and while you may have struggled with it at school, maths is key to ensuring that you don’t lose out in the long term when it comes to claiming on a home contents policy.
First time homeowners need to create an accurate tally of the combined worth (monetary value that is, not sentimental) of their belongings, and should include everything from scatter cushions and paisley print curtains to kitchen utensils and each and every electrical device/contemporary gadgetry.
You need to determine precisely what each individual item is worth. Or rather the price you paid for it rather than its current market value, as in the event of them being replaced in fiscal terms by your insurer in the aftermath of a successful claim on a policy, the replacement cost will be seen as the figure the policyholder paid for the item in the first instance.
4. Think about home security
What we mean here is seriously consider installing burglar alarms and having insurance industry-approved locks fitted to all your windows and doors. You may even wish to fit a CCTV system to overlook your property 24/7. Although make sure this doesn’t infringe on the privacy of a neighbour’s home as this wouldn’t go down too well and you’d probably be forced to remove the very visible criminal deterrent.
Also once you’ve acquired and fitted these home security measure don’t forget to tell your home insurance provider so as to reduce those premiums as a direct result of your forward thinking. Plus, make sure any alarms are switched on and working, otherwise this in itself could invalidate any future claim which you make on your policy.
5. Shop till you drop (on a great home insurance deal)
We’ve said it before and we’ll continue to say it, as it’s one of the most important pieces of money-saving advice we can give when it comes to insurance. That being to shop around relentlessly for a home insurance policy which works best for your individual requirements.
It doesn’t matter what your mortgage lender recommends (usually their own in-house policy which turns out to be much more expensive than an independent’s), nor should you always listen to other people, as a deal which might work great for them might not be the best solution for your home-owning needs.
So do your homework and shop around...
6. Don’t ignore your old boiler!
Hopefully it shouldn’t be that old, but irrespective of your central heating system’s age it’s paramount that you arrange a separate boiler breakdown cover to insure against the possibility of systematic breakdown or catastrophic failure.
Policies based specifically on safeguarding against potential boiler problems – as well as similar ones geared up towards plumbing and drainage – are usually offered as add-on features of existing home emergency cover packages, but beware that however useful they are when presented in this context the maximum pay-out a policyholder might expect is typically less compared to the more comprehensively-targeted stand-alone alternative policies which we’d be more likely to recommend.
Returning to the age-old theme though, and if it’s a relatively newly installed boiler/central heating system (the same applies to plumbing and drainage assemblages) then the equipment warranties which still apply to them should cover for most eventualities, in which case it could be better to avoid a separate insurance plan.
7. Homes are for life, not just for Christmas
With most mortgage plans being spread over a 25 year period on average, there’s every chance that fate might strike a cruel and devastating personal blow during this long passage of time. Be it health, wealth, employment status or whatever totally unpredictable circumstance arising out of the blue. So protecting the biggest asset you’ll probably preside over in your lifetime is of utmost importance to both yourself and your family/dependents.
Which is why arranging a suitable life insurance policy is hugely beneficial in the medium to long term when you’ve recently had your mortgage application accepted and your about to begin the next crucial chapter in your life.
Realistically anyone taking on a financial undertaking as far-reaching as a mortgage agreement should make contingency plans to counter the eventuality of things going a bit awry at some point; especially if they have dependents who might otherwise have to accept responsibility in the tragic event of the mortgage-holder’s untimely demise. Which is where term insurance, for instance, will pay-off an entire mortgage if the mortgage-holder dies prior to the mortgage being fully repaid to the lender.
Elsewhere you could opt for a decreasing term life insurance policy, which is often a cheaper proposition because the repayment amount drops over a period of time, or alternatively there’s the level term option, which is perfect for those with an interest-only loan.
Meanwhile critical illness insurance policies are something else well worth looking into and which also serve to provide a safety net in unavoidable, financially-straining life circumstances.
8. Pay for premiums in one go - if possible
It really does pay to settle your annual home insurance policy premiums in the one hit at the beginning of the proposed payment cycle/renewal time. If you can afford to that is.
Although it may not sound overly romantic perhaps, instead of providing a ‘new home’ gift list for family and friends attending a house warming party, you could ask everyone to put the cash alternative to a fondue set and pillow case set into a one size fits all money pot. Then you could pool these resources together and put it towards paying the 1st year of a home insurance policy bill. Either way it would eradicate the excessive interest bolted onto monthly premiums as well as any additional admin fees. Just a thought.
9. Choose your excess level carefully
The higher the excess you agree to on any home insurance product, the more you reduce the monthly premiums. Yes, some might see it as a calculated risk – one which could effectively see a policyholder stumping up more up front to begin with in the event of you claiming on a related policy – yet the net gain over a period of time nullifies the potential outlay should it be called upon to bail you out of a situation.
10. No claim, plenty of gain!
If you fail to file any claims on your home insurance policy over certain periods and terms of the contractual agreement then you earn yourself a no-claims discount, similar to the more familiar set-up indicative of motor insurance policies. Which subsequently has a money-saving knock-on effect with the premiums you pay thereafter.
You can avoid claiming on your home insurance plans by footing the more affordable bills should any repair of damages come to bear on your property at any given time, and remember the cost of certain repairs may also be cheaper than your excess amount, which again, will have the desired money saving effect.
Buy home insurance now and fix your premium until 2016!*
Home insurance might not be required by law, but it is definitely a good thing to have. In fact, many mortgage lenders ask that you have buildings insurance at the very least.
Whether you are looking for contents insurance, buildings insurance or other optional extras, Bob and his friends can help you find great home insurance deals.