If you’ve not taken out a new home insurance policy recently, you may be in for a surprise when you get your next quote. It’s getting more expensive.
The cost of home insurance has soared in the year to April 2018, with premiums rising by 7.6%, according to new data. That’s over three times the current inflation rate.
This was partly due to the rise in weather-related claims. These followed the cold weather conditions we experienced in the form of the ‘Beast from the East’.
Another reason is the government’s increase in IPT (insurance premium tax) to 12% this year. This tax also affects motor, buildings, pet, mobile phone, business and landlord insurances.
So how can you cut your home insurance costs?
We’ve got 7 straightforward tips for You.
1. Don’t pay for extras you don’t really need
It can hard to discern what’s essential and what’s not. But a lot of ‘extras’ added to your basic package will push up the price. So do you really need home emergency cover? What about accidental cover, legal expenses cover, individual item or increased garden or bicycles cover?
2. Buy your home insurance with buildings cover included
If you’re a homeowner, you almost certainly need both Building and Contents Insurance. If you’re a tenant, you’ll not as your landlord should cover buildings insurance. Just to be clear, buildings insurance will cover the bricks and mortar of your home. This is in the case of damage by fire or the elements etc. Contents insurance will cover what’s inside your home. It’s to protect your personal belongings. This could be anything from clothing, to laptops, to televisions etc. Combining the two in one policy is almost always is more cost-effective. Most insurers will offer a discount if you choose to buy both policies with them.
3. Pay up front with an annual payment
This is a very easy way to cut back on costs if you’ve the cash to do it in one lump sum. This is because most insurers will add interest when you choose to pay monthly. Typically it’s between 5% and 10% APR depending on the insurer. Suppose your annual quote is £250 and the APR is 10%. They’ll charge you 10% for the privilege of paying each month, then your actual cost will be £275.
4. Don’t over-insure either your contents or building
It’s pointless paying for what you don’t need. There are lots of guides online which will help you work out your contents value. Equally, be clear that is it’s the ‘re-build’ value of your home to give for buildings insurance. That is not the property’s market value but how much it would be to replace the structure. The easiest way to get this right is the Association of British Insurers’ own calculator. You can visit that here.
5. Increase your excess
One way to reduce your costs is to increase your voluntary excess. This is the amount you have to pay when you make a claim. This will range from about £50 to £250+. If you agree pay a higher excess this will usually lower your premium.
6. Don’t claim unless you have to
Your quote will be less the greater your no claims discount. If you don’t have to claim on your policy, you’ll get rewarded by a discount on your premiums. It makes a big difference. If you manage not to claim for over five years, it can make up to 50% difference. With this in mind, only claiming when you’re facing a big expense can reduce your premiums. If it’s a small repair, just doing it yourself will protect your no claims discount.
7. Make your home extra secure
Doing this makes sense anyway. But it means you can tick more boxes when you make your home insurance application.
Consider installing a burglar alarm and ensuring the model you use is approved by the insurer.
Get decent locks for your doors and windows. Do look at the wording on your policy. If you say you have one type and you have another, you’ll be invalidating the policy. A five-lever mortice deadlock is the gold standard for doors. Key-operated locks are the best for windows.
If you have valuables, then getting a safe installed is a good way to lower your premium too.
Does your street operate a Neighbourhood Watch scheme? It’s worth getting involved with it. Many insurers lower your premiums if you’re a member. You can find your local Neighbourhood Watch here.
If you’ve questions on home insurance or buildings and contents insurance, we can help you with the answers you need here.