Cut This And You Could Be Struck By Lightning!

It's a big mistake to cut back on this insurance, as one Fool discovered when his home was struck by lightning!

We all crowded onto the balcony to watch the thrilling thunderstorm. Moments later there was a flash and the loudest clap of thunder I've heard. Our house had been struck by lightning.

Thankfully, nobody was hurt and only one thing was damaged - my computer. The lightning had blown the motherboard and modem. It was fried.

My broadband company kindly replaced the modem free of charge but my computer was finished. No worries, I thought, it was four years old (antediluvian in computer years) and I needed an upgrade. My home insurance provider might even pay, I thought, a little craftily.

And happily, the sympathetic lady at the insurance company said it probably would. I'm now getting my local computer bod to see how bad the damage is and whether it is cheaper to repair or replace.

A handy reminder, if one was needed, of the benefits of having household insurance. This looks like being the third winning claim since I became a homeowner a decade ago, on top of a £500 payout for wind-damaged roof tiles in 2001 and £1,500 in 2003 after my father-in-law hammered a nail through the water pipe above our living room.

Age of extremes

I've bored my family and friends with the story of my lightning strike, and many said the same thing: "You won't be covered, insurers don't protect you against acts of God".

It's a common perception, and wrong. Most policies do cover natural disasters such as floods, lightning, stormy winds and earthquake. Given the extreme weather we've had in the UK in recent years, anybody who leaves their most expensive possession uninsured is taking a great risk.

Yet many people do. One in 10 homeowners, almost two million people, have no buildings insurance, according to Sainsbury's Bank, while another 4.7 million have neglected to take contents insurance.

More than 5,000 of the 20,000 homes damaged in last summer's floods were uninsured, according to Abbey Home Insurance, Many were poor households who had decided to economise by skipping insurance.

As the credit crunch tightens, more people may be tempted to save on their monthly household insurance premium, but think carefully before leaving yourself exposed.

Safe as houses

Even if you live in a low-crime area where burglary and criminal damage is rare, the unexpected can always strike, as I discovered.

You should also shop around for a competitive premium, particularly since buildings insurance has got a little pricier following last summer's floods.

The average combined buildings and contents insurance premium is currently £293 a year, according to The AA, but shopping around can cut this to around £184, saving you more than £100.

It isn't enough just to buy a household insurance policy, you also have to stick to its terms and conditions, or risk losing out when you claim.

If you're burgled, your insurer is likely to check that you have fitted all the door and window locks stipulated in the policy. What you need varies according to insurer and postcode, so read the small print carefully.

Don't just install the locks - use them, and be careful about leaving accessible windows open, because insurers will request a police report showing evidence of forced entry before approving any claim.

Cause for alarm

Here's an interesting paradox. Two neighbouring houses, one with a burglar alarm, and one without, are broken into on the same night. The house with the alarm had neglected to switch it on before going out, but the owner was still was shocked when his claim was rejected. The house without an alarm was paid in full.

Unfair? Maybe, but the homeowner would have received a small discount for their alarm, on the assumption they were turning it on, and a tough insurer could argue that they have breached their contract. So again, check you are complying with your policy.

Thankfully, most insurers don't demand we all install "power breakers" to protect electrical equipment from a power surge, but I'm popping out to buy a couple now.

They say if your home has a been burgled, it is more likely to be hit a second time. Perhaps the same goes the lightning.

The road to excess

I've just taken a call from my computer expert. My machine can be repaired, he reports, to my disappointment. I was hoping to make good use of my home insurance provider's "new for old" clause to get a brand new one.

Repairs are likely to cost around £175. After my £100 excess has been deducted, I'll get a measly £75.

I think I'll take the hit on this one. I don't want to see my no-claims bonus zapped as well.