Home Insurance

Anyone searching for a home insurance policy these days could easily find themselves a little overwhelmed by the amount of choice and products on offer. Today's insurance market is awash with companies vying for the attention of the home owner, all promoting their products with catchy messages, special offers and glossy advertising. However, although there appears to be a vast number of home insurances policies on the market, there are in fact only two. This means the only real dificulty facing the homeowner is which insurer will get their custom. So, no matter how confusing home insurance can seem, it's always good to bear in mind that there are just two basic types; Home Insurance and Home Contents Insurance.

Home Insurance - This is the insurance that covers the building or actual structure of the house. You might also hear it referred to as Bricks and Mortar Insurance.

Home Contents Insurance - This insurance covers the contents of the house and can amount to quite a substantial list of items. You can expect a good home contents policy to cover your personal possessions, household appliances and non permanent fixtures and fittings. On occasions you might even find a home contents insurance that covers money kept in the house as well, but there will normally be an upper limit you can claim for written in the terms of the insurance. Contents insurance is designed to protect a homeowner's possessions from the main threats that exist; Theft, Vandalism, Fire and Flood. It's also possible that some home contents policies will cover accidental damage to equipment and valuables too, which can be invaluable to those with small children and boisterous pets who both have a tendency to knock things over.

Home Insurance Small Print

The general rule of thumb with most home insurance is that all the home's permanent fixtures and fittings are covered, these are the things that are normally left behind when the house is sold. However, this is only a general guide and can vary between insurance providers, so it's always wise to familiarise yourself with the terms and conditions of the insurance policy. By not fully understanding the exclusions in the insurance can be a disaster waiting to happen, as in the event of a claim, you might actually find out too late that the insurance doesn't actually cover certain situations.

Home Insurance and Lodgers

Taking in lodgers can be a very grey area when it comes to home insurance policies. For example, if you let a room as a means to boost your income then you need to inform your insurance company you are doing so. Most home insurance policies will not normally cover the lodger's contents, despite them residing in your home, so they will be expected to arrange their own separate contents insurance. Be aware, though, that if your lodger were to steal from you then this is rarely covered in the terms of most home insurance policies. Most contents insurance will only pay out for thefts that are a result of forceable entry, so a light-fingered lodger wouldn't be creating that much needed evidence to support a claim.

Home Insurance Tip

Some of the most common exclusions found in home insurance policies are: Pools, Outhouses, Greenhouses, Walls, Garages, Sheds and Fences. So if your property has any of these then do pay particular attention to the small print of the insurance policy before buying it.

Home Insurance and Geographical Risks

When you buy a house you become the legal owner of two things. Firstly, you own the plot of land the house resides on. Secondly, you own the structure of the house or "bricks and mortar", as it's sometimes called. Unfortunately, not all houses are found in the most desirable locations and when this happens it's usually an environmental issue that's blighting the area. A couple of examples of this are flood risk areas and homes built on or near eroding coastlines.

In the past, any house located in a high flood risk area would almost certainly be deemed a high insurance risk. Entire neighbourhoods would all be categorised in this way. However, technology has advanced and nowadays insurance companies have access to accurate flood maps which show exactly the houses most at risk from flood water. With these flood maps they can now calculate home insurance costs according to the risk attached to each individual property, whereas in the past all homes in the vicinity would be flagged. This means homes that are unfortunate to be located in high flood risk areas - yet don't suffer any flooding - can enjoy competitive home insurance quotes along with the majority of UK homeowners.

Home Insurance Tip

When buying a house you will find most estate agents and mortgage lenders will say if there are any geographical risks in the area. However, If they don't, and you suspect there might be, then do make sure to ask as this could ultimately lead to some very costly home insurance premiums.

How Do They Work Out Home Insurance Premiums?

Home Insurance costs can vary and are largely dependent on factors associated with the house, all of which are taken into account by the insurance company working out the premium. For instance, the property's location, size and value are all contributing factors that influence insurance prices. Things such as subsidence and flood risk are equally important to consider. These two alone would have a very undesirable affect on the overall cost of insurance for the home. So, with all these variables to consider it's hardly surprising that, according to the AA, the cost of home insurance in the UK can vary by as much as 300%, with areas such as London the most expensive and Devon the cheapest.

Postcodes also play a role in determining the cost of home insurance premiums. High risk areas, such as those in the city, have a greater chance of being burgled and this fact is reflected in the cost of home insurance. The home owner's choice of career is also taken into account, especially if it involves long periods away when the property might be left unoccupied, as this makes the ideal environment for the burglar to go about his business. This extra element of risk will, in turn, push up the price of insurance cover as the insurers have to factor in the increased likelihood the owner will make a claim.

Aside to the natural environmental concerns, like floods and subsidence, there are man-made ones that can also be of concern to the insurer. Mines are a prime example. Britain's mining history has left some areas of the UK with abandoned mineshafts, and any home unfortunate to be built on one could eventually begin to experience structural damage. Consequently, in the eyes of an insurance company, a home like this would be classed as very high risk indeed.

Furthermore, as home insurance policies cover the cost of rebuilding the property then it gives further scope for other costs to be factored into the premium as well. The availability and price of good local tradesmen is one, all of whom would have to be paid for by the insurance provider. Add to this any special materials or building techniques used in the home's construction and you start to see the reason why home insurance quotes can vary a lot.

Home Security Devices

When looking to buy home insurance it's quite a good idea to ask the insurance company their advice on risk reduction at your particular address. You might find the insurer has a list of preferred security devices which you could install to bolster your home's security. By adding all or any of these you would be seen to be taking your home's security seriously, considerably minimising the risk at your address, and possibly qualifying yourself for a substantial discount on your home insurance at the same time. The items on these lists can be extensive and possibly quite costly if you were to implement them all, but by adding just a few you would be boosting the overall security of your home. Some of the most common security measures insurance companies recommend are: Deadbolts, Alarms, Neighbourhood Watch Schemes, Five Lever Mortise Locks and Window Locks.

Home Insurance Tip

If you are keen to further enhance your home's security in this way then do check with your insurance company on their preferred makes and models. Some companies will stipulate the exact product and model number you need in order to qualify you for a discount on your home insurance.

Minimising Risks

From an insurers point of view it's all about minimising the risk at your home, so any steps taken to make a property safer will normally reduce the cost of the insurance for it. Insurance companies might even consider a non-smoking household a reduced risk, so if you and your family are all non-smokers then do let your insurers know. Also, an unblemished record with a history of no insurance claims will give you good credibility with any insurance company, as they do tend to prefer the more security conscious, careful home owner.

Home Contents Insurance

Home Contents insurance is there to cover the theft or loss of your personal possessions and household items. This includes things such as TV's, Furniture, Electrical Appliances, Computers and Carpets etc. Some contents insurance (but not all) will cover you for accidental damage to these items as well, so do check the terms and conditions of the policy very carefully.

Also included in most home contents insurance is a certain amount of liability cover. So, for example, if someone were to be injured on your property then this would cover you for the costs arising from their claim against you, if they were to do so. Another good example is where a burst pipe in an apartment has resulted in damage to the property below. The liability cover in home contents insurance would protect the policyholder from the inevitable damage claims against them.

Damage and Losses in Home Contents Insurance

The threat to a home's contents normally comes from only two sources: Loss or Damage.

Damage to home contents can come from anywhere, not just the fire and flood we automatically think of. It's very easy to forget that burst pipes can cause untold damage to the inside of a house as carpets, walls and even furniture can all be caught up in the disaster.

The threat from loss, however, is far easier to pinpoint as it's normally the result of a burglary or break-in, and a good home contents policy will easily cover the replacement of any lost items. You might also find contents insurance that takes into account the loss incurred through irreparable damage, which can be an asset to those with precious or valuable items in their home.

Home Contents Insurance Tip

If you have a number of valuables about your house it might be worthwhile searching for a specialist home contents insurance for them, as regular insurance companies often have upper limits you can't exceed in any one claim. So, if you happen to have any rare, unique or antique items then there are several companies that offer specialist home contents insurance policies. If you prefer, however, you might be able to have them named on your existing home contents policy, but this will more than likely push up the price of your premium.

Whichever option you choose, though, do make sure to do a thorough and comprehensive inventory of those valuable items and list them in their entirety on the insurance policy.

Consolidating Insurance Policies

It can often be worthwhile buying both home and home contents insurance from the same insurer. Buying both policies together can seem an attractive proposition to any insurance company, and they may even offer you some discount as an incentive.