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A guide to home insurance
With more than 729,000 burglaries taking place in the UK each year as well as £3billion of flood damage losses covered during 2007, it`s easy to see why home insurance is so vital. For most, our homes are our most valuable asset and any damage to them needs to be rectified immediately, which is where home insurance can provide security and peace of mind.
So what types of home insurance are available?
Broadly, there are three types of home insurance available in the UK:
-Buildings insurance – Covers the rebuilding cost of a home (not the market value) so that if, for example, your home burned down you would be covered for the reinstatement value. A good buildings insurance policy will provide protection against storm damage; fire and explosions; burst pipes; subsidence; and third party damage.
-Contents insurance – Gives protection to anything not classed as a permanent fixture or fitting, such as electrical appliances and furniture etc. The cheapest form is indemnity insurance which replaces your goods with items in a similar state of repair – i.e. a five-year-old carpet for a five-year-old carpet. To receive brand new replacements you require new-for-old cover.
-Buildings and contents insurance – Combines buildings and contents insurance together, usually for a reduced premium if purchased jointly from the same insurance company.
In addition there are many specialist insurers that offer unique policy options for homes of high value, eco homes, holiday homes and more. You should still shop around for home insurance quotes even if you own one of these properties – however, a specialist will have more experience of dealing with the needs of this type of property owner. There are also specialist policies available to those working from home, those with listed buildings, student homes and houses that are self-builds.
Where to find cheap home insurance
The quickest way to find cheap home insurance is to use a comparison website.
Most home insurance providers offer their cheapest quotes online due to reduced overheads – many insurers offer 5- to 10 per cent online discounts. However, with a home insurance comparison tool you can compare deals across a range of providers helping you find the cheapest in minutes.
There are however, many other ways to save:
-Enhance security: Install (and use) a burglar alarm, fit mortice locks, join a Neighbourhood Watch scheme, install security lighting, fit time-switch lights and security cameras for extra discounts off your premium, typically in the region of five- to 10 per cent.
-Increase your voluntary excess: This is the amount you are willing to pay should a claim be necessary. The higher it is, the lower your premiums will be.
-Reduce the risk of fire damage: Fitting smoke alarms can help you save money on your home insurance. At least one per floor level is recommended.
-Don`t smoke: You pose a greater risk to your home insurance company if you smoke at home – so cut it out if you haven`t already.
-Get the right level of cover: Only buy the policy options you really need.
-Avoid claims: Your home insurance company should be there when you need it. However, for small claims it`s often best to deal with the issue privately to avoid wiping out your no-claims discount, if you have one.
Some thoughts on buildings and contents insurance
Remember that buildings insurance should reflect the rebuild cost of the house and not the retail value as this includes the land. With contents insurance think about cover for items in your garden, bikes and freezer contents and consider whether you really need these home insurance extras.
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