Home Insurance - Your Questions Answered
Are you confused by home insurance, the terms involved and the stipulations in a contract? Here we answer some of the most common home insurance questions to put your mind at ease.
Signing on the dotted line for a home insurance policy is a big commitment. After all, this is the document that you will rely on in the event of serious upheaval such as a home fire or a home theft.
You need to ensure that your policy is worth more than the paper that it is written on and that you are getting good value for your money. In order to do that you should have complete confidence that all of your questions have been answered and you know exactly what you are getting yourself into.
Here we take a look at some common home insurance questions and answer them for you:
Q: What is buildings insurance and what is contents insurance?
A: Buildings insurance will cover the bricks, mortar and structure of your property along with its permanent fixtures and fittings. Contents insurance meanwhile covers all of the non-permanent items that you keep inside your home such as televisions, beds, computers, carpets, etc.
Q: How high should you set the insurance policy limits?
A: For the buildings insurance aspect of a policy you should cover the rebuild value of a home – that means how much it would cost to rebuild if it were to burn down. You should not cover its retail value as this takes other factors into account such as location and the land you own. With contents insurance you should make a regular assessment of the value of the contents in your home and insure appropriately.
Q: What is new for old?
A: New for old cover means that you get a brand new replacement for any item that is stolen or damaged beyond repair. The opposite of new for old cover is indemnity cover with which you receive a like for like replacement – so if the item damaged was seven years old you’ll likely receive a seven year old replacement.
Q: How can you build a no-claims discount?
A: No-claims discounts are effectively a reward for not making a claim on your home insurance policy. Every year your insurer may increase the level of discount it offers up to its policy limit. However, bear in mind that a no-claims discount will not necessarily stop your renewal premiums heading north because your discount is separate from your insurer’s assessment of risk.
Q: What is personal belongings cover?
A: This covers items that you take in and out of a home in everyday life up to the set policy limit. These items can include, but aren’t limited to, mobile phones, MP3 players, cameras, laptops and glasses.
Q: Does it cost more to pay home insurance monthly?
A: Most insurers (although there are exceptions) will charge interest on monthly premiums. By paying annually you can cut out these interest charges.
Q: Do you pay an administration fee to change a policy?
A: If you need to make a change to a policy, such as for a change of address, you may need to pay an administration fee depending on the insurer involved and the change being made. Typically this fee is in the region of £10.
Q: Is it cheaper to buy home insurance online?
A: The majority of home insurance providers offer their cheapest deals online due to the savings they make on costs such as call centers and staff. Discounts online typically appear in the region of five- to 10 per cent depending on the insurer.
Q: Should you accept a home insurance renewal quote?
A: You should shop around every year for home insurance to ensure you’re getting value for money. Even if your existing insurer offered the best deal when you took the policy out it does not mean that a more competitive policy has not been launched elsewhere – plus most of the attractive incentives are offered to new policyholders. So it makes sense to shop around annually and see if you can make some additional savings.
Q: Can you cancel a home insurance policy mid-term?
A: Most home insurance policies last for a period of 12- to 18 months. If you find a better deal elsewhere during this term you may want to switch but bear in mind that there will usually be an administration charge. You should consider how high this charge is and whether you would still save money by paying the fee and moving to the cheaper deal.
Q: How can you find cheap home insurance?
A: Comparison websites make it easy to find cheap home insurance by comparing as many as 50 insurance policies with one search.
You need to ensure that your policy is worth more than the paper that it is written on and that you are getting good value for your money. In order to do that you should have complete confidence that all of your questions have been answered and you know exactly what you are getting yourself into.
Here we take a look at some common home insurance questions and answer them for you:
Q: What is buildings insurance and what is contents insurance?
A: Buildings insurance will cover the bricks, mortar and structure of your property along with its permanent fixtures and fittings. Contents insurance meanwhile covers all of the non-permanent items that you keep inside your home such as televisions, beds, computers, carpets, etc.
Q: How high should you set the insurance policy limits?
A: For the buildings insurance aspect of a policy you should cover the rebuild value of a home – that means how much it would cost to rebuild if it were to burn down. You should not cover its retail value as this takes other factors into account such as location and the land you own. With contents insurance you should make a regular assessment of the value of the contents in your home and insure appropriately.
Q: What is new for old?
A: New for old cover means that you get a brand new replacement for any item that is stolen or damaged beyond repair. The opposite of new for old cover is indemnity cover with which you receive a like for like replacement – so if the item damaged was seven years old you’ll likely receive a seven year old replacement.
Q: How can you build a no-claims discount?
A: No-claims discounts are effectively a reward for not making a claim on your home insurance policy. Every year your insurer may increase the level of discount it offers up to its policy limit. However, bear in mind that a no-claims discount will not necessarily stop your renewal premiums heading north because your discount is separate from your insurer’s assessment of risk.
Q: What is personal belongings cover?
A: This covers items that you take in and out of a home in everyday life up to the set policy limit. These items can include, but aren’t limited to, mobile phones, MP3 players, cameras, laptops and glasses.
Q: Does it cost more to pay home insurance monthly?
A: Most insurers (although there are exceptions) will charge interest on monthly premiums. By paying annually you can cut out these interest charges.
Q: Do you pay an administration fee to change a policy?
A: If you need to make a change to a policy, such as for a change of address, you may need to pay an administration fee depending on the insurer involved and the change being made. Typically this fee is in the region of £10.
Q: Is it cheaper to buy home insurance online?
A: The majority of home insurance providers offer their cheapest deals online due to the savings they make on costs such as call centers and staff. Discounts online typically appear in the region of five- to 10 per cent depending on the insurer.
Q: Should you accept a home insurance renewal quote?
A: You should shop around every year for home insurance to ensure you’re getting value for money. Even if your existing insurer offered the best deal when you took the policy out it does not mean that a more competitive policy has not been launched elsewhere – plus most of the attractive incentives are offered to new policyholders. So it makes sense to shop around annually and see if you can make some additional savings.
Q: Can you cancel a home insurance policy mid-term?
A: Most home insurance policies last for a period of 12- to 18 months. If you find a better deal elsewhere during this term you may want to switch but bear in mind that there will usually be an administration charge. You should consider how high this charge is and whether you would still save money by paying the fee and moving to the cheaper deal.
Q: How can you find cheap home insurance?
A: Comparison websites make it easy to find cheap home insurance by comparing as many as 50 insurance policies with one search.
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