In the UK, it isn’t a legal requirement to take out home insurance in the same way it is for car insurance. So, do you really even need it?
Most mortgage lenders will require you to have buildings insurance in place as a condition of lending you the money. That means most homeowners will need at least some basic insurance in place, but there often aren’t any specifics on what you need or additional cover like contents.
The main question to ask yourself is…
…how would you cope if you experienced damage to your home or your possessions?
Imagine for a second that you’re just coming back from holiday. You’ve sat in the sun for a week, eaten lovely food, and are just starting to feel relaxed again. As you get back home and walk through your front door, you notice a puddle of water collecting in the hall in front of you. Looking up you notice the ceiling is sodden and sagging down, with water running down the wall. As you run upstairs to see the damage, you soon realise that there’s been a problem with the plumbing in your bathroom that has seeped into several other rooms destroying carpets, some of your furniture and curtains, as well as the ceiling and walls downstairs.
That’s an example of the most common claim on buildings insurance in the UK, and an average claim is around £5,000.
Most people can’t afford that anywhere near that amount of cost with no warning, and that’s where your insurance helps out.
Insurance is like sun cream
You know there’s a risk to not having it, and if you’re going to use it then you should be confident that you can rely on it.
That’s why we focus on giving your peace of mind with our 5-star rated home insurance cover.
So I should get as much cover as possible then?
Well, no, the highest cover doesn’t always mean the best cover. ‘Unlimited’ cover could mean you’re paying more than you need.
Paying extra for this doesn’t make sense if you don’t need the extra value.
This one can be hard to work out, and that’s why lots of people get drawn in by it.
Lots of insurers will upsell their ‘premium’ policies that comes with higher cover limits, with some reaching as high as ‘Unlimited’ levels of cover. But…
…insurers get nervous about ‘unlimited’ offers so they charge more for them.
Some people need a very high level of cover where normal policies aren’t enough, and unlimited can be an appropriate choice for them. But these are a minority of cases, and most will end up overpaying disproportionately for what they need.
So when might higher cover limits be worth it?
1) When it doesn’t cost you anything extra
Even if you roughly know what amount of cover you need, if a provider is offering more than this at their standard price then it could be a good value way to give your policy space to grow with you over time without worrying.
2) You’re not sure exactly how much you need
It can be hard to to be sure exactly how much cover you need, particularly if your estimate comes out around a threshold level for some providers. In these cases, it’s better to overestimate as it’s easy to forget things that can add up!
But the most important thing to remember is that higher cover levels are not the only thing that makes a policy ‘the best’ for you. Make sure to look at the specifics on inclusions and exclusions for what matters to you as well.
Our home insurance policy covers up to £1 million for Buildings and £100,000 for Contents, which is more than enough for most people.
How do I save money on my insurance?
1) Increase your excess…
Every policy has a standard excess (£100 is a common amount), but will give you an option (‘voluntary excess’) to add onto the standard. Increasing your voluntary excess will usually decrease your premium, in some cases dramatically.
…but it’ll cost you more to claim
If you decide that you’re never going to claim for anything less than £300, then you could say that a total excess (standard + voluntary) of £300 would be right for you.
2) Switch provider every year…
If you look hard enough then you may well be able to find a better deal with a different provider, as insurers change their prices and risk appetites every year.
…but you’ll probably have to do this EVERY year
To ensure you’re getting the best deal with the right cover for you, you might have to do a lot of searching every year. At some point, you may need to think about the value of your time vs the potential saving of shopping around.
3) Reduce the additional cover options on your policy…
When you took out your policy, you may have added certain extras like home emergency cover etc. Removing these could notably lower your premiums while still keeping the base cover in place.
…but it might put you at risk
Think back to why you buy insurance that we talked about earlier. Removing cover that you actually need could cost more in the long run if you
needed to claim.
