Buildings insurance
Buildings insurance is a compulsory insurance
if you have a mortgage on your property. It covers you for damage
caused by water, wind and fire to the structure of your home and
any non-moveable items such as fixtures and fittings.
The 'sum insured' needs to cover the cost of
rebuilding your property and should not be confused with the market
value of your home or the value attributed to it by its council tax
band.
To calculate this, see the Association of
British Insurers’ website for a comprehensive guide and calculator
http://abi.bcis.co.uk/index.cfm#usingcalculator
Contents insurance
Contents insurance, by contrast, is an
optional insurance and round 25 per cent of households fail to
buyit.
It covers all the items in your home
which are not bolted down, or those that you would take with you if
you were moving home.
Insurance cover for your belongings is more
complex because of all the expensive gadgets we own these days.
Desktop and laptop computers, personal videos and music players,
iPods, DVD players and CD collections are just some of the items
you may not have factored into the level of cover you need.
Most insurers place a limit on the amount you
can claim for each individual ‘high risk item’ and if you want
cover for your belonging outside the home you will normally have to
pay an extra premium for ‘personal belongings.’
You need to declare any high value items (such
as jewellery, watches, paintings, antique furniture and so on)
which exceed the ‘single high risk item’ limit which is typically
£1,500.
The insurer will require written valuations to
price the cover accurately and your will need to keep these in the
event of a claim.
For further details on what contents insurance
covers, read our ‘Guide to contents insurance.’
Public liability cover
Remember that you could be held liable for
accidents to individuals working at your property and damage caused
to other people’s property.
For instance, if your window cleaner falls off
his ladder and dies, you will need ‘public liability’ in case you
are sued by his relatives. Most buildings insurance policies
automatically incorporate public liability cover of at least £1m,
but always check.
Similarly, if a tree in your garden falls onto
your neighbour’s conservatory and caused damage to its, your
buildings insurance should pay out for any claims made against you
by your neighbour.
How do I calculate the value of my
possessions?
People are often surprised at how much their
possessions are worth. Room by room, make a list of all your
belongings and add up the cost of replacing them.
If you have valuable or unusual items, it is
essential to get written valuations, otherwise you risk under or
over insuring.
If you underinsure an item, the insurer will
reduce any payout proportionately. Over insure and you needlessly
pay too much.
New for old?
Also decide whether you want to insure your
belongings on a ‘new for old’ basis, or on a 'wear and tear'
basis.
By taking out a new for old policy, you will
normally get brand new replacement items. However, if you go for an
indemnity policy, which recognises that your belongings have
suffered some wear and tear, you will pay a lower premium, but also
receive a lower payout in the event of a claim.
If you have student offspring, check whether
you have cover for their possessions while at university included
in your policy. Student accommodation is an easy target for
burglars and if you don’t have cover, student offspring may be well
advised to buy stand alone insurance for their belongings.
What is the excess?
The excess is the amount of each claim you
have to pay yourself. Clearly, the higher the excess, the lower the
premium. For expensive cover, such as subsidence, the excess could
be as high as £1,000-£5,000, but policies differ, so check the
small print.
Buying insurance online
Some insurers offer discounts for buying
online and cash backs for introducing friends or family members.
But while cheaper premiums may be offered online, the minimum
excess may be higher than average. Also check that the policy
paperwork you receive in the post matches what you were offered
online.
Optional extras
Insurance for personal belongings
outside the home, accidental damage, legal expenses (usually
limited to domestic contract disputes, employment and wills) and
home emergency cover are all optional extras which you may be
offered for an extra premium.
You should consider whether these are worth
buying, depending on your lifestyle and the likelihood of you
making a claim under these covers. For instance, a childless couple
who takes good care of their home, may not want accidental damage
cover under their contents insurance.
Cover for personal belongings outside the home
may be covered under your travel insurance policy, but the latter
will only cover you when you are outside a certain radius from your
home (typically 30-50 miles).
If you ask for bicycle cover, check out
exactly what it covers. Most bicycle owners suffer more from
vandalism (ie theft of bike parts such as wheels, lights or
saddle), rather than outright theft of the bike. Most insurers only
provide cover for bicycle theft.
Some insurers offer cover on personal
entertainment digital rights and downloads for an extra
premium.
Pitfalls to watch out for
If you pay by direct debit, you could end up
paying up to 18 per cent extra, so try to pay the full cost
upfront. To ease the pain, use a zero per cent credit card.
Remember to tell your insurer if you are going
to be away from home for more than 30 days and be prepared to pay a
small extra premium for an extended absence.
Complete the application form honestly.
Otherwise you could invalidate a subsequent claim on the grounds
that you ‘withheld material information.’. For instance, if your
insurer requires a certain level of security (in the form of locks,
burglar alarm and grilles) in order to give you a discount, be sure
that these really are in place.
No claims discounts
Your no claims discount can be protected for a
small extra premium by purchasing "no claims discount protection."
This will maintain your NCD status, even if you have to make a
claim.
Making a claim
Your insurer may pay a claim immediately if it
is for a small amount (usually under £500). But for any large or
suspicious claim, the insurer will send an inspector to investigate
the claim or appoint a loss adjuster to act on its
behalf.
If you make a large claim or the insurer
disputes your claim, you can hire a loss assessor
to act on your behalf.
If you need to make a claim, ring the hotline,
complete the claim form, and send in any supporting documentation,
such as crime report number, witness statements, valuations and
receipts. Check with your insurer before undertaking any emergency
repair work as it may want to instruct its own contractors.
If you have a dispute with your insurer, you
can file a complaint with the Financial Ombudsman
Service:/www.financial-ombudsman.org.uk/