Home & Contents Insurance – Buying A Policy
Purchasing home insurance is, perhaps, an easier process than buying motor insurance. But the same basic rules apply. The same principles of insurance apply.
You MUST tell the truth to your insurers (and they in turn must tell the truth to you!). This is called ‘utmost good faith’. And, legally, you have to tell them everything that might affect their assessment of the risk you present to them.
In practice, you are only required to answer the questions they ask. The traditional way is of course to fill in a proposal form for your insurer, either via an intermediary or with a direct insurer. This will contain a declaration at the end that confirms you have given them the correct information. It also provides them with your signature to meet certain Data Protection Act(s) requirements.
Most insurers now subscribe to CUE. (Claims and Underwriting Exchange) This is a national computer database where almost every household (and motor) claim in the country has been recorded for many years.
So, for example, you can’t take out a policy with different companies, claim on them all and make money out of your insurance.
If you do not disclose to them the truth when you answer a question on the proposal form, you could have your claim refused or your cover made ‘void’, i .e. the contract never existed.
So don’t conveniently forget about those three little claims you made last year on your last policy! You will be found out.
Many insurers now just ask you some questions on the telephone. They will record the conversation and the recording constitutes a written proposal. So whatever answer you give, must be the truth. Otherwise the same thing will happen.
Internet sales (at the time of writing) are now really taking off, so much so that several of the major UK insurers such as The Prudential and The Pearl have disbanded their direct sales force. In many ways, home insurance is the ideal product to buy via the internet . If you buy tangible goods over the internet, you can’t see them, feel them, try them out before you buy. They have to be sent to you by a traditional mode of transport. With home insurance, the potential is there for the whole contract – your proposal, your policy, your schedule – to be downloaded to you and saved on your computer.
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Home Insurance – What Cover To Pay For
This is down to you and your requirements. You can read up about the different cover types in more detail on the policy cover page.
First, decide upon your requirements.
Do you own the buildings?
Do you live in a flat or a bed sit?
Perhaps you just need to cover your contents?
Are you accident prone?
Do you have children?
What sort of property do you live in and do you have a lot of valuable items or just simple, basic furniture?
Thus, you have to chose (for both buildings and contents) if you need, and can pay for, accidental damage cover or if you can live with just the basic perils covered. Considering questions like these will help you decide.
Second, calculate the value of the risk you are proposing to the insurer. This means, for your buildings, noting down the type of property (number of bedrooms, style, age) and working out the physical size of the building. If you live in a block of flats or with others sharing a building, you will need to get together and do this then buy one policy for all of you.
For the contents, you should write down a list of every thing you have and note beside it the replacement value (you want ‘new for old’ cover don’t you?). Too much like hard work? Sounds as if you need a bedroom rated policy. It will save all that work but you might be paying out a higher premium for higher sums insured than you need to.
Third, consider all those special items and valuable pieces you have. If you have any valuable jewellery, antiques or works of art, I strongly recommend you have them listed as specified items on your policy. This will cost a little extra but well worth it. Before doing so, get each piece professionally valued (and if jewellery, gem checked) and photographed. Similarly with bicycles, expensive camcorders, laptop computers and so on. Indeed, anything of value that you take out and about with you.
Fourth, I recommend you take out cover for unspecified items outside of the home. This cover should also give you accident damage cover for these items within your home. The only people that do not require this cover are those that never go outside their front door! It will also cover you for your basic baggage whilst on holiday thus saving you on your travel insurance. And the cover is better! (Travel insurance always pays indemnity – they take off wear and tear. Your unspecified cover, if you follow my advice, is ‘new for old’ – except clothes).
Fifth – liability cover. This is a must have. It is always provided free with your other cover. Make sure you have it on both buildings and contents if you are an owner. If you do not own buildings, then the liability cover on contents is fine on its own. Its a bit like having ‘third party’ cover on your car (although not legally compulsory).
Lastly, there are the extras many insurers now provide. Such as free legal help lines and emergency assistance providers. My personal experiences of these services is not that favourable. I usually end up getting out the ‘Yellow Pages’. Then all you have to do is buy the cover you want. Chose an insurer who has a good reputation, even if it costs a little more. All of the insurers featured on our site have a good reputation !!…..and of course they offer great value for money.
Home Insurance – Renewing The Policy
Your ‘duty to disclose’ comes up again at renewal. So if the risk has changed at all you should tell your insurers.
But, subject to that, if you are happy with your cover, your insurer, service and the price has not gone up by much, you should stay where you are. There is still some benefit to insuring with the same company for many years. A good claims manager will be sympathetic to you if you have been a good customer over the years and might settle a claim that would otherwise be rejected.Where you are not happy for any reason, shop around and see if you can do better.