The eight biggest home insurance mistakes

Rachel Wait reveals eight of the worst home insurance blunders we all make....

Home insurance isn’t the most exciting of topics, I’ll admit, but it’s an important one. And with winter drawing in, bringing darker evenings, home insurance claims are expected to peak due to adverse weather and an increase in the number of burglaries.  

As a result, ensuring you have adequate home insurance in place is even more important!

So here are eight of the biggest home insurance blunders we’re all prone to making:

1. Not having insurance in the first place

The first mistake is not to have a home insurance policy in the first place.  

Recent research from The Co-operative Insurance and Shelter has revealed that over a fifth of households in the UK have no insurance protections in place. This is partly because many of you (42%) feel you can’t afford to take out a policy.

I can understand that. But more than a fifth of you haven't got any just because you don’t think home insurance is important and 18% of you don’t believe you have anything worth insuring. Meanwhile, 15% of you don’t have any insurance simply because it’s not a legal requirement.

This is pretty worrying stuff. After all, if the worst were to happen and your home were to catch fire, you might be surprised at just how much it would cost you to replace all of your belongings. In fact, it would probably be considerably more expensive than simply paying for an insurance policy in the first place.

2. Underinsuring your possessions

Even if you do have home insurance, many of us fail to have enough insurance. In fact, on average, we’re underinsured by a whopping £4,650*!

However, if you don’t have enough insurance in place, and you did need to claim, your insurer may assess your property and only pay out in proportion to what you’re covered for.

Of course, it can be really difficult to work out exactly how much all of your possessions are worth. After all, it’s easy to think a wardrobe of clothes is far less valuable than it actually is, and it’s easy to exclude items you have in the garden or shed.

So a really handy way to figure out whether you’re sufficiently covered is to check out this clever home contents calculator from NFU Mutual. It guides you through each room in your house, and all you need to do is add in the value of your belongings.

It’s also worth looking at the Halifax Virtual Home which has plenty of tips on how to protect your home and how to sufficiently cover your belongings.

And once you’ve worked out how much your belongings are worth, make sure you regularly check that this is still the case.

Alternatively, if you really want to ensure you’re fully covered, opt for an insurer that offers unlimited cover as you won’t have to specify a limit to the value of your home contents.

3. Thinking the cheapest option is best

All of us want to keep our costs to a minimum. However, opting for the cheapest home insurance policy isn’t necessarily the best solution.

According to Defaqto, home insurers are increasingly offering certain aspects of cover as optional extras rather than as standard features. So if you’re choosing the cheapest policy, there’s a good chance you might not be covered for everything you need to be. For example, according to Defaqto, 82% of policies include accidental damage as an optional extra, while 11% include plants in the garden as an optional extra.

So, if you want to ensure you’re fully covered, you may need to pay that little bit extra. And make sure you read the terms and conditions of the policy carefully so you know exactly what you’re covered for.

4. Forgetting about personal possessions cover

Leading on from this, you also need to check whether your insurance includes personal possessions cover. This protects your belongings when they are outside your home.

These days we’re all prone to carrying around a lot of valuable items – your mobile phone, your iPod, your wallet, your expensive watch, your handbag, and so on. So making sure these items will be covered when you step outside your front door is a very wise move.

5. Forgetting about single item limits

This is one aspect of home insurance I really wasn’t aware of until a couple of years ago. Most insurers automatically cover valuables up to a certain amount, typically around £1,500.

So if you have an item that’s worth more than this limit, you need to get it named separately on your policy. Yes, this will push up your premiums, but you need to do this to ensure you’re covered. If you’re not, the insurer won't pay out in the event of a claim - which means you could lose thousands of pounds simply by failing to spot this clause!

To keep your costs down, make sure you shop around fully and compare deals. Some insurers will have a higher single item limit - M&S home insurance, for example, has a limit of £4,000 - so make sure you use the lovemoney.com home insurance centre to check out the best deals.

Recent question on this topic

• toyraman asks:

  why does my home insurance renewal quote increasing every year, even though no claims?

  • 
    LoveKat answered "There are probably a myriad of reasons for this happening... For example, quite a few people don't..."
  • 
    Paul Warburton answered "Lovekat is spot on, the insurance industry moves through soft and hard markets and these markets..."
  • Read more answers

6. Paying monthly

You might think that spreading your costs and paying for your home insurance in monthly instalments is a good idea. But if you do this, you’ll end up paying more in the long run because interest will be added to your payments.

If you can’t afford to pay the full amount upfront, it’s a good idea to pay with a 0% on new purchases credit card, such as the Tesco Clubcard Credit Card. This card offers 13 months interest-free on all purchases. So you’ll have over a year to clear your balance without worrying about paying interest. Just make sure your balance has been paid off before the 13 months comes to an end, otherwise you’ll be hit with an interest rate of 16.9%. Alternatively, if you prefer, you could go for the Sainsbury's Card, which offers 0% for a slightly shorter 12 months.

7. Staying loyal

When your home insurance policy is up for renewal, don’t simply ignore the letter you receive from your insurer and let your policy roll over for another year. Insurers tend to offer their best deals to new customers only and then push the premiums up in the second year. So even if you had a good deal for the first year, chances are you’ll pay a considerable sum more in the second.

So make sure you do your own research, compare various home insurance policies online, and see if you can get a better deal elsewhere!

8. Making too many claims

Finally, you might think it doesn’t matter how many claims you make on your insurance, but unfortunately, that’s not the case.

If, over a period of three years, you make three claims on your home insurance policy, you’re likely to find it much harder to get insurance. Some insurers frown upon this and as a result, they will refuse to issue you with a quote when you come to renew your policy. And those that do are likely to charge you ridiculously high premiums.

So to avoid this, try not to make a claim unless you really need to.

*Research from The Co-operative Insurance and Shelter.

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