Advice on Household Insurance
Legal stuff
This is just an introduction to household insurance and is not intended to be representative of the covers or restrictions offered by any particular insurance or that all insurance provide the protection described. You can get a recommendation for a particular insurance to suit your own circumstances by talking to the skilled staff at any Coversure branch.
Why buy Household Insurance?
Your house and your personal belongings will represent a large part of your total assets. Most people want to protect their houses and possessions against the possibility that they might be damaged or lost in some unexpected event, such as a theft, or a fire, or due to bad weather.
If you have a mortgage on your property, it is usual for a building society or bank to insist that the buildings are insured for their full value as a condition of them granting you the mortgage.
What is covered?
There are 2 different types of policies that you might have to insure your house. A buildings insurance, covering the fabric of your house, the walls, the roof, windows and so on, and a separate contents insurance covering your personal possessions. It is also possible to have a combined buildings and contents policy.
You will be covered against certain “perils” which will be described in your policy. You will be covered for loss or damage to your property in the event of fire, explosion, lightning, earthquakes, storms, floods, theft, vandalism, falling trees, water leaks or subsidence.
On a buildings policy, you will also be covered for your liability to other people if they injure themselves whilst visiting and it is due to your negligence. Accidental damage to underground pipes and cables will normally be covered too.
What is not covered?
Accidental damage to your buildings or property will not normally be covered unless you purchase it as a separate option.
There will be a policy excess, which will be an amount of money which you will pay in the event of you having a claim. Typically this will be £50 for any claim except for subsidence, where it may be £1000.
Storm and flood damage to fences and outbuildings such as a garden shed is normally excluded, and it is usual for there to be no cover for theft or for water bursts if your home is unoccupied for an extended period of time, such as longer than a month.
On the contents side there will be limits on the amount that you may claim for the loss of money (typically £300) or credit cards (typically £500) and there will be limits to the amount that you can claim for a single article.
What does it cost?
It depends on the total value of your buildings and contents. During September 2005, the average price paid by a Coversure customer for household insurance was £229
What to watch out for?
Better buildings insurance policies will have cover for broken sanitary ware and will pay for alternative accommodation if your home becomes uninhabitable.
Some contents insurances offer “New for Old” cover, which means that your possessions will be replaced as if they were new. If the policy does not have “New for Old” cover, you will be reimbursed for the cost of a lost or damaged item, less an amount to allow for wear and tear. Often insurers will offer to replace valuable items such as jewellery or electrical items like televisions or cameras directly from appointed suppliers. This can advantageous, but you never have to take up this offer and may take the cash value instead.
Some contents insurance policies include cover for bicycles and freezer contents, normally up to a limit of £500, but some insurances exclude bicycles and freezer contents altogether, or it is an option that you have to pay extra for.
You may have to declare that you own items which are valuable, which might be anything more than £1000 in value. These will be insured under a separate section of the policy for “all risks” and will be specified individually. For valuable jewellery, or works of art, you may have to get an independent written valuation before the items can be covered.
Some policies index link the cover that they give you so that you don’t have to think about reviewing the cover every time the policy comes up for renewal.
Building Societies and banks will often lead you to believe that you must purchase household insurances from them. This is not true, but they should be mentioned on the policy as having an interest in the property. They may charge a fee for “checking” that a policy not supplied by them is suitable. Sometimes Coversure can arrange to have this fee deducted from your first year’s premium.
What options are worth having?
Accidental damage cover is normally sold as an optional extra. This will cover you in the event that you accidentally break an item, subject to the normal excesses of the policy being paid.
All risks insurance can be added to a contents insurance. This will also cover your belongings when you take them outside the home, although not if they are stolen from a motor vehicle, because you will be expected to claim for this type of event under the vehicle insurance policy. It’s sometimes called Valuables Insurance and covers theft, loss or accidental damage. This will cover high value belongings such as jewellery if you take them on holiday, which would not normally be covered by a travel policy because the individual item limit on your travel insurance would be exceeded.