Home Insurance is one of the most crucial insurance policies you can take out, if not the most crucial.
For home owners, their property will be probably by far and away the biggest asset in terms of value they have. It could prove ruinous if it was destroyed and you weren't insured.
A home is also often hugely important for reasons of stability and emotional attachment.The main function of home insurance is to cover the cost of rebuilding the property (or equivalent elsewhere) if it was ever partly or totally destroyed. Additionally, the majority of individuals taking out cover also choose to insure the contents of their home as well.
It can be quite easy to get the type of cover wrong – you value the potential rebuilding costs incorrectly, or underestimate what's inside it is worth – so here's a top ten check list to consider when buying a policy:
Be aware of what the contents element of the policy covers
A good number of people are surprised to find that if they have their bicycle stolen from their back garden it's probably not covered unless you paid extra for it to be.
Others might not realise that a good number of policies will cover items when you're abroad.
Reducing the cost
One simple way is to choose a higher excess (the amount you pay out before the insurance kicks in), but you have to weigh up your home as a high or low risk property before doing so.
Another way is to improve the security of your home, perhaps fitting a burglar alarm, or additional locks to windows and doors. At renewal time, no claims made during previous years helps bring premiums down too.
And stop smoking! That has an obvious impact on the premium.
Don't accept what your bank or building society offers you straight away
Many will offer you cover as if it's 'part of' your mortgage, as they make lots of money this way. However, although it's a legal requirement that you have it if you have a mortgage, make sure you shop around as what their offering you will undoubtedly not be the best deal you could get on the market.
Keep records
It's a great idea to photograph all your main content items, especially in the place they're normally kept. Also religiously keep receipts on anything you consider particularly valuable.
Get the contents estimates right
Research carefully what the contents of your home might cost to replace if stolen or, for example, destroyed in a fire. It can be surprising what things cost if you haven't tried to replace anything for a while!
Get your re-build estimates right
If you're uncertain as to what a complete rebuilding of your home might cost, ask around friends and family to see if anyone knows a friendly builder who wouldn't mind giving a bit of their time to provide a free estimate.
Annual built-in increases
Keep an eye out for the annual increase. In the small print most will have an automatic increase along the lines of '3% or inflation, whichever's higher'. Over the years this can add up, so again shop around at renewal time to check.
Avoid keeping anything outside the main part of your home
That means in sheds, garages and outhouses. Unless you have arranged special cover for parts of your property outside of the main building, you probably wouldn't get paid a penny for them in the event they were stolen or destroyed.
It makes sense if you think about it; they're clearly much easier to nick things from!
New purchases
At the time you renew or take out your policy for the first time, you might not own particular items that you purchase subsequently. If you've splashed out on an expensive bicycle, or fantastic sofa, you wouldn't want to find out it wasn't covered would you?
Call your insurer to check if anything valuable that you acquire either needs special insurance, or would mean your contents cover is undervalued.
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