Tips to reduce the cost of home insurance

Hannah Davidson, Senior Director of Underwriting, Aviva, has the following recommendations for reducing the cost of Home Insurance:

It’s understandable that people focus on their finances and potentially cut back where they can. But when it comes to home insurance, the question shouldn’t be, “Can I afford it?” but “can I afford to do without it?”.

We encourage people to ask themselves if the worst were to happen, could they find the money to replace the possessions in their home? Or more importantly, could they afford the expense of rebuilding their home?

We would all like to think that events like floods, fires and burglaries will not happen to us.

But the sad reality is that they can and do happen.

There are ways to help reduce the cost of home insurance, such as purchasing a combined buildings and contents policy and finding providers who offer multi-product discounts.

Many insurers also offer different levels of cover, so customers should choose the one that best suits their needs.

But they should also be aware of any maximum limits payable on their policy to ensure they are high enough to cover their belongings and, importantly, the costs of rebuilding the home.

To facilitate this delicate calculation, the Association of British Insurers provides a calculator for the costs of rebuilding the house on his website which you can use as a guide.

Aviva has put together the following tips that could help reduce costs when buying home insurance:

  • Consider a combination font. If you own your home, either directly or with a mortgage, you can save if you buy combined contents and buildings coverage, rather than two separate policies. However, if you are renting, you will probably only need contents insurance to protect your belongings inside the property.
  • Ask about multi-product discounts. Some insurers offer discounts if you have more than one product, such as home, auto, travel, and even health insurance.
  • Check if your home is in a flood zone. If so, and it was built before 2009, ask if your insurer is part of the Flood Re* scheme, which helps improve the affordability of flood insurance for people living in areas with high risk. Some insurers are not part of the scheme and premiums may be higher for people living in high risk areas, or they may exclude flood cover, so it is important to check.
  • Choose a higher deductible level. Most home insurance policies have a standard deductible if you make a claim, but you can choose a higher deductible amount which can often reduce your premium. But check that you could afford to pay it if you had to make a claim and think about how you would pay it. Avoid incurring credit card debt if possible.
  • Don’t double. You may be asked if you want to take out additional insurance when buying new items such as a sofa, rug or telephone, for example. Before saying “yes”, make sure you are not already covered by home insurance, especially if you have accidental damage coverage. If you don’t have accidental damage cover, you may find it cheaper to add it to your home insurance policy than to pay for separate policies, but always check the terms.
  • Consider supplements. Your home insurance premiums will generally increase if you add optional coverages such as “accidental damage” and “personal effects” which may cover items outside the home. But make sure you can afford to pay for a new item if you lose or damage something or you may find that deleting an add-on could be a false economy if you have to claim.

There are also a few areas where it’s worth doing your homework beforehand.

Here are some additional tips to avoid any shock or disappointment in the event of a claim:

  • Know your “single item limit”. Home contents policies will usually have a ‘single item limit’ for valuable items and personal effects, the maximum payable for an item in the event of a claim. Anything above this limit – usually between £1,000 and £2,000 – should be listed separately on your policy, to ensure you are properly covered.
  • Check the value of your valuables. The price of precious metals has skyrocketed in recent years, so it may be worth getting an independent appraisal for jewelry if you’ve had it for a while, in case it’s now worth more than your item limit. The same goes for some high-end watches and it’s worth checking the current value of items you may have already specified to make sure they’re insured for full replacement value.
  • Avoid underinsurance. Underinsurance occurs if the total sum insured – the total amount an insurer would pay – is less than the value of your belongings (in the case of home contents coverage) or the cost of rebuilding your home (for building insurance). Some insurers offer “global or unlimited coverage”, so you don’t need to estimate values, but if you do, make sure you don’t sell yourself short. Don’t forget to include things like rugs and curtains when reviewing your content.

When it comes to buildings, be aware that the sum insured must be sufficient to completely rebuild your property, including outbuildings and features such as boundary walls, fences, driveway and patio.

It is important to understand that the cost of reconstruction is not the same as the resale value, which can be higher or lower depending on your property.

  • Be aware of the different limits for sheds, garages and outbuildings: most insurers have an upper content limit for items stored in outbuildings, often around £2,500, although this varies from policy to policy. ‘other. Insurers may also ask that any individual items stored in outbuildings worth more than a certain limit – say around £1,000 – are listed separately on the policy, so think carefully about what you keep away from home main and make sure you have good security in place on your sheds and garages to deter opportunistic thieves.