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How Important Is Home Insurance & Are You Paying Too Much For Yours?

With today’s access to global news, it seems like every time you turn on the television you are faced with images of damage and destruction caused by a natural or manmade calamity. And although this is disconcerting, it’s not easy to imagine yourself in the shoes of those victims of disasters caused by fire, flooding or earthquake when they live so far away. Like the TV show Crimewatch always says ‘you always think that these things happen to someone else’. However, people lose their homes and all their belongings for more often than you might think, and whilst you listen to people’s heart rending stories of how it happened out of the blue and without warning, seizing their homes along with everything in it, it’s easy to forget that the UK is not excluded from these kinds of freak weather events.

As a UK householder you may be forgiven for thinking that these types of calamity are reserved for other countries but the floods in 2007 and the more recent floods in Cumbria and North Yorkshire prove that the UK has its fair share of weather related catastrophe’s. It has never been more important to make sure that you are adequately covered.

However, not having home insurance is a bigger issue than you might think. A study by the poverty site updated in 2011 shows that half of the poorest households in the UK do not have home contents insurance.

If you are buying a new home or budgeting to finish paying off a mortgage on an existing property, you might start wondering; is home insurance really important? What are the chances of you losing everything because of fire or flood. Yes, your home could be your biggest investment in life, but how important is it to have it covered through buildings insurance? And when was the last time you tallied up the value of your household contents? Do you know what would be covered on your existing cover? is there a excess to pay on the policy?

In this article we discuss the pros and cons of home insurance and what should be considered when purchasing insurance cover for your home.

What is Home Insurance and Should You Buy It?

Home insurance provides protection for your home in case a fire or flood or other events that cause structural damage, and contents insurance covers your belongings if they are damaged in similar circumstances. The policy you choose will have specific wordings and it is extremely important that you read them carefully to know what is covered and what is not.

In some instances, it is a pre requisite of your mortgage that you have sufficient buildings insurance, and when you purchased your most recent home you may have received recommendations from your bank or estate agent to purchase both contents and buildings insurance. Most people choose to take out the mandatory cover at that time. However, adding insurance that covers the contents of your property is normally optional and so a significant number of people decide to take an uncalculated risk and not take any out.

Should You Take Out Home Insurance?

In March 2012, in an article that stated that nearly 1.5 million home owners were not covered by insurance, the BBC highlighted the dangers of leaving your home uninsured. The article demonstrated that having home insurance in the UK is of paramount importance as most people are completely unaware of the devastating and life changing effects of losing everything you own. Contents insurance may seem optional but once you start adding up everything you may need to replace you may come to realise that without insurance your life is going to change considerably.

Obviously, some disasters are likely to cause more damage to certain types of buildings. For instance, if you live in a thatched cottage or a timber framed property you are statically more likely to suffer more damage in the event of a fire than someone living in a brick built property with a slate roof. The owners of a period cottage in Devon had to rebuild their property themselves in March 2013 when it was severely damaged by fire and they had not taken out insurance. Whilst these types of events, covered in detail by the BBC website are rare it illustrates the devastating effects of not having home insurance, including rebuilding your home from little more than scratch.

Tips on Buying Home Insurance

It is very important to make sure that you understand the coverage of home insurance policy and that you understand the limits and exclusions of such coverage. You should shop around for the best offers and spend time considering all your options, before carefully selecting a coverage that works best for your circumstances and budget is highly recommended.

A study by This is Money in December 2015 found that less than 20% of people could recall their last years home insurance premium and only 13% could recall their excess. This lack of understanding has lead to many people paying more for the home insurance than they need to.

Another very worrying report from the financial watchdog covered in the same article also suggests that people who are loyal to a particular provider are losing out to those that shop around when it comes to their renewal time. In the graph below you may be shocked to see that staying loyal does not pay dividends. In fact, the average customer who has stayed loyal for five consecutive years pays an average of 70% more than a new customer.

So, the first thing to make sure you do is set a reminder for when you home insurance comes up for renewal and do your research. However, make sure that you compare your quotes from different home insurance providers to know the type as well as level of coverage provided at the right price.

Don’t assuming anything and ask to check your home insurance policy wording to ensure that you have adequate coverage for the premiums you are paying for and nothing extra.

Check your excess amount which is the portion of your claim amount that you have to pay in the event of a claim.

Contents Insurance

As previously mentioned contents insurance covers items inside your home such as carpets, rugs, and other floorings as well as valuable items like jewellery, paintings, and laptops. However, sometimes items over a certain value needed to be stated separately on a policy and this can be problematic, especially if the item was purchased in between renewals, so read the policy and always call your to add new expensive purchases to an existing policy.

Placing a value on your contents can be a tricky business and not have enough insurance is a very painful experience. Always, value your items on a new for old basis.

“If your household items are going to cost £40,000 to replace and you only have £20,000 worth of insurance cover you will only get half your items replaced.”


How Much Should You Pay?

As we have already mentioned auto renewing your policy can be very costly, so before you sign up check that your insurer is going to contact you before the renewal date. If you would rather be loyal, and some home insurance providers will give you a no claims discount and reduce your premiums if you do not make a claim during the year, always ask for a cheaper quote before signing up to another year.

The Home Insurance Tick List

  • Pay your premiums on time and keep your policy always updated for adequate protection.
  • Check if your home insurance gives you an option for alternative accommodation or for the living expenses such as hotel bills in case your home is damaged and not liveable.
  • Check if your home insurance covers for escape of water during a crisis covered in case one of the plumbing systems is damaged and pipes are burst.
  • Check if you have any home emergency services option covered by your insurance policy.
  • Know your coverage limits, sum insured and exclusive wordings on your policy documents.
  • Inform your home insurance provider if you have any non-standard construction in your home so that you are not caught by surprise in the event of a claim procedure.
  • Never auto renew, either speak to your current provider and ask for a discount or shop around.

Finally, always read the small print. In the event of a disaster, you do not want to be reading your policies terms and conditions for the first time, by then its way too late. Be prepared and clarify with your insurance provider any areas you are not completely sure about.

In conclusion, there are many more factors that you should consider when choosing the best cover for your home and contents and this is just a few of them. Always consult an expert before making a final decision.



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