Home insurance is a basic term for two different insurance products. Buildings insurance to protect your property's structure and home contents insurance to cover your moveable household objects and valuables.
Unfortunately not all home insurance policies are created equal making it difficult to compare like with like. The level of protection offered can vary from policy to policy along with the price. So having a good idea of what you need to insure and for how much will reduce the overall time and money spent buying it.
TIP 1: Less risk equals a lower premium
All insurance plans protect against the risk of financial loss. So to keep the cost to a minimum, cut the risk to the insurance company and you'll be rewarded with a lower premium. Some of the most effective measures are:
* Speak with your home insurance company or local neighbourhood watch scheme and they will send you a list of steps to take to make your house more secure.
* Fit locks to all windows and level 5 (BS3621) mortise deadlocks locks to the doors. Most insurance companies will give you up to 10% off your contents insurance if you have these locks fitted.
* Have an alarm fitted by a recognised alarm fitter, which your insurance company can recommend, and again this can give you up to 10% off your premiums. Please bear in mind that these are expensive alarms which require annual check-ups.
* Higher policy excess. You will usually have to pay the first £50 of any claim, but if you're willing to pay more, you can cut your premium further.
* Neighbourhood watch. Some insurers offer discounts if you live in a neighbourhood watch area; however this is becoming less common.
* No claims bonus. Like your car insurance; a record of no previous claims will reduce your premiums. If you need to make a claim, consider whether it may be cheaper to pay for the loss yourself to avoid an increase in premiums.
* Your age. Statistics show that the older you are, the less likely you are to make a claim. So if you're a lower risk this will be reflected in your premiums. Some insurers offer extra benefits to those over 50.
* Special precautions. Declare any special security provisions you've made for your valuables such as a home safe.
* Your lifestyle. If you have a dog, are teetotal and don't smoke, be sure to declare this as such factors are used by some insurers to reduce premiums.
* Applying to your existing insurer as a new customer can reduce your premiums. Many insurers offer discounts to new customers which won't be repeated when you come to renew your policy.
* If you apply online you will normally get a discount of around 5%.
Before carrying out any security improvements to your home, always check with your insurance company first. They will confirm which improvements will have the biggest cost cutting impact.
TIP 2: Don't pay for home insurance you won't need
Working out an accurate figure for your buildings and contents insurance value can be awkward, which is the main reason why a lot of homeowners are either under insured or paying for levels of cover they don't really need.
Buildings insurance covers the re-build cost of your property not its market value. The re-build value of your home is the cost of re-building it in the event that it is destroyed by fire or subsidence for example. The re-build value of your home can usually be found on your mortgage agreement, or property deeds. The Building Cost Information Service (BCIS) of the Royal Institution of Chartered Surveyors (RICS) produces detailed guidance on the cost of rebuilding houses and flats together with a re-building cost calculator.
Alternatively, you can opt for a policy that has an unlimited or high standard buildings sum insured so you don't have to be concerned about insuring the right amount.
Home contents insurance covers almost everything else you would take with you if you moved house. Make out a list of the rooms in your house and write down all the items contained in each with the total value. Then total the individual amounts to see what overall contents insurance you need. Don't forget to value items such as CD's, videos and clothing as their collective cost is often under insured.
TIP 3: Look at separate policies
If you need both buildings and contents insurance, get quotes for separate policies for maximum potential savings. Most insurers do provide them as separate policies but, just because one is cheap for buildings cover, doesn't mean they are equally competitive to insure the contents. Find the cheapest providers for each component and consider buying each from different insurers.
TIP 4: Shop around for maximum savings
Like any other retail product, the biggest savings are revealed by shopping around.
Firstly, don't simply opt for the home insurance supplied by your mortgage lender. They can be convenient when your busy sorting your mortgage but they're often over priced and chances are they won't have been compared against other policies on the market.
When shopping for insurance you basically have three options; go direct to the insurer, browse the web or use a broker. If you have the time and commitment you can do all three, but the fastest and most effective route is to log on and use the reach of the internet.
The best insurance websites compare dozens of brokers and home insurance companies in minutes. You only have to fill in one form to get a list of premiums displayed on your screen from major insurers and brokers. However, if you have unusual or very specific requirements the final premium may increase when confirmed direct with your chosen insurer.
TIP 5: Ask for cheaper home insurance
Like every other product, insurance has a margin of profit built into it which can be negotiated down if you're armed with the right information. Not every insurer will buckle and concede an additional discount but if you don't ask you won't know.
* First, get the cheapest quote after using internet comparison sites and phoning a few brokers.
* Armed with the cheapest quote, contact your existing insurer first asking them to beat it. If they won't budge contact the second cheapest insurer and do the same.
* If after all that the insurer won't cut the premium, ask them to throw in some extra cover to sweeten the deal or move on to the next home insurance company on your list.
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