Skimping on home insurance could prove to be a disastrous false economy. Here's how to get the best cover at the lowest possible price.
I've been thinking about home insurance a lot lately. Mine's due for renewal next week, and next month I'm off on my summer holiday - which always inspires a little prayer that I won't be broken into while I'm away.
Here, I'm going to look at how to get the best possible home contents cover at the lowest possible price.
It's a good time to get covered
Now is an excellent time to buy the best home contents policy you can possibly afford. According to recent research from the AA, home contents insurance premiums continue to fall, and are now cheaper than they were 15 years ago.
And there's a more worrying reason to make sure you're fully covered. Burglaries tend to increase during times of economic hardship; and indeed, crime figures released last month revealed a 1% rise in burglaries - the first increase for six years.
Flying in the face of the evidence
Despite these facts, a large proportion of us are leaving our homes unprotected. In an effort to save money during the recession, many Britons are canceling insurance policies - including home insurance - and leaving things to chance.
Research from Halifax Home Insurance suggests that one in six people have no home contents insurance at all. That's despite the fact that one in seven of those questioned admitted they felt more at risk of burglary than ever since the economic downturn hit.
Skimping on home insurance could be one of the worst financial decisions you ever make. According to a new study by Sainsbury's Finance, the cost of replacing the contents of the average British home (in the event of a fire or other major disaster) currently stands at a whopping £44,500.
I think that's a pretty good reason to get properly covered.
What to look for in a home insurance policy
Here are the main things to look for when you're searching for home insurance:
Unlimited cover: Paying a little bit more for a policy that offers 'unlimited cover' may make financial sense in the long run.
The alternative is to insure the contents of your home for an exact amount. And to make this work, you need to be very sure of the total value of your possessions.
If you underestimate the value of items - or forget to include things in your assessment - you run the risk of being under-insured. If this happens and your belongings are stolen or destroyed, your provider is not obliged to pay out for your full claim.
Just remember that even with an unlimited cover policy, there is likely to be a limit on the insurable value of each individual item (typically £1,500 - £2,000). If particular valuables are worth more than this, you need to name them individually on the policy and get them insured separately.
Personal possessions cover: Many of us now carry several hundred pounds worth of belongings around with us on a day-to-day basis. Adding personal possessions cover to your policy means that valuable items (like a laptop or iPhone) should be covered when they're outside your property.
Again, there will be an individual limit on the value of each item. Read Make sure your home insurance covers this! to find out more.
Valuable extras: Many policies also offer extra benefits to get you through particularly difficult situations or risky periods.
For example, it's a good idea to hunt for a policy that automatically increases your level of cover over Christmas, when burglaries increase and presents add to the total value of your home contents.
Another valuable extra is emergency home repairs cover. This means your provider will pay out if you need to deal with a domestic emergency quickly - like getting a burst pipe fixed within a day.
How to reduce your premiums
Shop around: The single best way to cut the cost of home insurance (any insurance, come to that) is to do your research and shop around.
That's what I'll be doing this coming week, even though I'm happy with the essentials of the policy I have at the moment. Existing customers rarely get offered as good a deal as new ones, so when it's time to renew your policy, find the most competitive new deal you can and then ask your current insurer to match it.
No claims discount: If you haven't made a home insurance claim recently, it's also worth hunting down a policy that offers you a 'no claims discount'. The more claim-free years you have, the greater the percentage discount is likely to be.
Buildings and contents together: You'll often find that it's cheaper to buy your buildings and your contents insurance from the same provider.
This also simplifies any claims process that involves both, as you only have to deal with one company.
Security pays: The more secure your property is, the lower your premiums are likely to be. For example, combine burglar alarms (linked to the police network) with visible, key-operated window and door locks and you could easily knock 15% off the price of your policy.
Keeping your possessions safe
Of course, prevention is better than cure. There are many simple measures you can take to protect your home and belongings - so hopefully, you won't need to make a claim in the first place.
In addition to burglar alarms and good locks, consider taking the following steps:
- Get the locks changed as soon as you move into a new place (whether you're renting or buying). Who knows who has copies of the existing keys?
- If the wall or roof of an adjacent building provides easy access to your home, ask your neighbour if you can paint it with an anti-grip coating (making it more difficult for would-be burglars to climb).
- Keep valuable items away from windows and out of sight.
- Keep your windows and doors locked even when you're at home - particularly on the ground floor. Many burglaries are 'unforced' acts of opportunism, with the thieves simply walking in, grabbing the goodies and walking out.
- Finally - don't leave keys hidden outside. Burglars tend to be very experienced at looking under doormats and flowerpots!
The Virtual Home site, from Halifax, is quite useful in this regard. It allows you to explore a 'virtual home' which is protected from burglars and the steps that have been taken to do so. Have a look.
More: Watch out for these seven car insurance tricks! | Seven steps to cheaper life insurance
Compare home insurance with lovemoney.com.