Home Insurance Cover

Published date: 14 February 2011 |
Published by: Reporter
Read more articles by Reporter

The cost of home insurance cover varies widely so when applying for the first time or when getting a renewal policy it is always best to shop around.


Factors that affect the price of the home contents insurance policy are location, amount of cover, the type of cover and the excess level.


Location affects price because certain areas have a higher incidence of break-ins and theft than do others. That means a high density inner city location is likely to attract a higher premium than a rural home in the Highlands of Scotland. Whilst some actions can be taken to mitigate the cost, such as security systems and Neighbourhood Watch Schemes, these will only reduce the premium slightly. In addition, if the policyholder declares that the property is protected by, for example, window deadlocking and an intruder alarm system then it will be expected that these are used on every occasion the property is left vacant. Should a break in happen and the alarm not be set then it could invalidate the subsequent claim.


It is easy to underestimate the amount of home insurance cover needed. Even a modest family home can easily have £25,000 of contents if all the clothing, computers, electrical goods and furnishings are added together. Therefore, make sure that the right level of contents cover is applied for. Too little could end up in a pro rata payout if the insurance company believes that the contents have been deliberately understated to attract a reduced premium.


Home contents insurance policies come in many different guises. Some are more comprehensive in their cover and will allow damaged or stolen goods to be replaced by new items. Other policies will only payout on a replacement value basis meaning that if the TV was five years old when stolen it will only pay out the equivalent value of a five year old set. Therefore, it is prudent to always look for new for old cover even at the expense of a slightly higher premium. Equally, some insurance companies offer valuable added extras that may be worthwhile considering. These can include legal costs cover or travel insurance for the policyholder(s). These bundled offers could be attractive in certain situations so make sure to read the small print and select the appropriate options.


Whilst home insurance cover can be bought separate to buildings insurance there can be savings by bundling the two together. Many providers offer a discount if the two policies are bundled and, from the policyholder's perspective, there are no gray areas as to what is covered by whom.


Finally, one top way of reducing the premium on any home insurance cover is to accept more of a financial obligation in the event of a claim. The higher the loss accepted by the policyholder before the insurance company has to payout the lower the premium payable. This can be an effective way of reducing the cost whilst ensuring that any major costs are covered. From the insurance company perspective it reduces the likelihood of small value multiple claims making their administration and pay outs less likely.


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