Insurance Advice from the experts – Mint FS
It doesn’t matter whether you live in a one-bedroom flat or a five-bedroom detached house, your home is no doubt your castle. So it’s important to make sure that you have the right protection in place in case something should go wrong.
What if there was a fire or the roof was damaged in a storm? Would you be able to pay for the repairs? And where would you live if your house was uninhabitable? Your home also contains some of your most valuable possessions. Could you afford to replace your flat screen TV or your jewellery collection if you were the target of burglars?
Then there is Landlords Cover – Although there’s no legal requirement for a landlord to have a landlord policy, a normal home policy won’t cover you if you are renting to tenants. If you let to tenants without dedicated landlord insurance you are running a risk.
Also, if you have a mortgage on your property, your mortgage lender might require you to have a valid landlord policy before you let to tenants.
You may also need to have written permission from your mortgage lender before you let your property, so it’s important to make sure otherwise you might find yourself breaking the terms of your mortgage.
And have you considered Short Term Sickness & Unemployment Cover – Payment protection insurance (otherwise known as short term income protection) and mortgage payment protection cover, are both different forms of accident, sickness and unemployment cover, more commonly known ASU or Short Term Sickness Protection.
This kind of policy is particularly useful if you are concerned about whether or not you could cope financially in the event that you lost your job through redundancy or ill health.
Home Insurance – Common exclusions
Buildings insurance will not normally pay out for damage due to wear and tear, or acts of war or terrorism. If your home is unoccupied for more than 30 days during the year, you could also invalidate the policy. Always read the small print before you buy buildings insurance to make sure you have the right cover for your needs.
Is buildings insurance compulsory?
It is not compulsory to take out buildings cover, but if you have a mortgage on your property the lender will almost always insist that you have adequate insurance. If you are in the process of buying a home, you should make sure you have buildings cover in place when you exchange contracts, as you then have a financial interest in the property.
Home Insurance – How much buildings insurance do I need?
You should have enough insurance to cover the rebuild cost of your home. In other words, if your property burnt to the ground, the insurance should pay for it to be rebuilt. But remember that the rebuild cost is not the same as the sale price or the current market value of your home. In fact, it is often lower.
Tenants do not need to worry about buildings insurance as it is the landlord’s responsibility
If you have just bought your home, the rebuild cost should be on the mortgage valuation. Otherwise, many insurers offer free online calculators. Or, you could visit the website of the Association of British Insurers, which has lots of useful information, including a calculator.
It is important to work out an accurate rebuild cost. If the sum insured is too high, you could end up paying over the odds for cover you don’t need. If it is too low, you could be left with an insurance shortfall – and a big bill.
Some firms offer so called unlimited cover, which means they will pay out, whatever the cost. It sounds great, but bear in mind that it might work out more expensive. The insurer might also calculate a sum insured based on the type of property, the number of bedrooms and the area. Again, it’s often a good idea to check the accuracy of the figure yourself.
Mint FS recommend that you regularly review the rebuild cost of your home to make sure the figure is up-to-date as prices inevitably change over time. You might also renovate or extend your home, which would also affect the rebuild cost.
If you live in an unusual or listed property, the rebuild costs can be more difficult to calculate and you might need to seek professional help from a surveyor.
Home Insurance – Counting the cost of contents
You don’t just need to insure the structure of your home; you also need to insure its contents against loss or damage caused by theft, fire, storms, lightning, flooding or other water leakage, as well as explosions or earthquakes.
The contents of your home might be more valuable than you think. The average family of four estimates their contents to be worth £25,000. However, their true value is actually closer to £55,000. And it’s important to get the figure right so that your insurance will pay out in the event of a claim.
The best way to make sure you have adequate cover is to walk round your house room by room and make an inventory of your possessions. Jewellery, computers, iPods – they can all add up to quite a sum. And don’t forget the contents of your shed. Contents also include clothes, furniture, carpets and curtains. If you are unsure, it might help if you think of the things you would take with you if you were to move house.
Make sure you read the terms and conditions of the policy because most insurers limit the pay out for a single item. For example, if the single item limit is £1,500 and a ring worth £2,000 is stolen from your home, you could end up with a £500 shortfall.
Your insurer will probably ask for details of any valuable items, and it is important that you give all the relevant information. If not, you could invalidate the policy and the insurer could refuse to pay out in the event of a claim.
Home Insurance – New for old
Contents Insurance is usually arranged on a new for old basis. In other words, if your TV is damaged by fire, the policy will pay out for a new one. However, some insurers offer indemnity policies that take into account wear and tear. So, if your TV is 10 years old, it will only pay out its current value, not it’s price when it was new. Indemnity policies tend to be cheaper, but most people prefer new for old cover.
You can buy additional contents cover – and in some cases it might be worth the extra premium. Accidental damage is a popular add-on because it insures your possessions in case of an accident, perhaps if you spill red wine on the carpet or knock over a valuable ornament. Personal possessions insurance can also be useful because it insures items such as mobile phones, iPods, cameras and laptops when you take them out of the home.
Contents insurance for tenants
Tenants don’t need to worry about buildings insurance, but they should certainly consider tenants insurance for the contents of their rented home as they can amass quite a collection of valuable items. Some types of rented accommodation are also more vulnerable to theft, perhaps because of shared entrances, so it’s especially important to have adequate cover in place.
It’s often a good idea for tenants to extend their policy to include accidental damage, just in case they cause any damage to the landlord’s carpets or curtains. However, bear in mind that some insurers will not cover your contents if you live in shared accommodation, or if you rent a furnished property.
What students need to know
Students often overlook contents cover – if you are going away to university, insurance is often the last thing on your mind. But students can be victims of crime, just like everyone else. Student contents insurance will also protect your belongings in case of fire, flood and vandalism – even burst pipes.
Some students choose to add their contents onto their parent’s policy, which can be straightforward. But it can also work out more expensive than separate cover, so it pays to compare quotes.
Remember that you will need your own contents cover if you live in shared accommodation. Check also that the policy includes any bicycles or musical instruments and that you are insured during the holidays as well as term time.
Home Insurance – The risk of flooding
Millions of properties are at risk of flooding, which means they might have trouble arranging home insurance. Flood Insurance claims can be tricky to assess, not to mention expensive, so insurers are wary of flood prone homes.
The Association of British Insurers has struck a deal with the government to ensure that many homes that are prone to flooding are guaranteed cover. But you should expect to pay higher premiums for your home insurance if you live in a flood area. The excess for any flood claim could also be high, possibly running into thousands of pounds.
You can find out if your property is at risk by visiting the website of the Environment Agency at www.environment-agency.gov.uk.
There are a number of ways to protect your home from floods – in fact, your insurer might insist on some defensive measures as a condition of your cover. Flood boards, for example, can help to keep out the water in the event of a shallow or flash flood. It’s also a good idea to move the boiler, plus any meters and electrical points, to well above the likely water level. You could also make sure that doors are concrete rather than wood.