When I was a mortgage advisor one of the things which struck me again and again was how willingly people were prepared to part with significant sums of money without ever considering that that they might not need to pay as much. The excitement of buying a home seems to disable our everyday financial prudence and we happily sign away our money without a second thought. So, if you’re buying a house, keep a cool head and make sure that you don’t just accept everything that you’re presented with. One of the areas in which you can probably save money is on your home insurance. If you’ve got a mortgage, buildings insurance is compulsory, but you’ll probably also want to take out contents insurance as well.
Don’t pay for more cover than you need
Buildings insurance is intended to cover the cost of rebuilding your house from scratch, don’t assume that it’s the same as the market value of your home. It should cover the cost of demolition, site clearance, architect’s fees and then the cost of rebuilding. For most of us, fortunately, total demolition is not something our homes are likely to require but you might well claim for fire, flood, tree damage, vehicle collision or burglary damage. Working out the sum for which your house should be insured is obviously pretty tricky which is why many people have ‘bedroom rated’ cover which calculates your insurance on the basis of how many bedrooms you have. Easy to calculate but you’ll almost certainly end up paying for cover that you don’t need. You should also make sure that you’re not over-paying for contents insurance: if you opt for ‘bedroom rated’ or ‘unlimited cover’ then once again you’ll be paying for more cover than you need. You should also be aware that ‘new for old’ cover is going to cost you a lot more than ‘indemnity’ which takes account of the age of the item and pays out a sum accordingly.
Build a no-claims discount
Not everyone is aware that insurance companies offer a discount as a reward to people for not making regular, time consuming, small claims. Getting your no-claims bonus can mean a reduction of between 30%-70%. So, although it might seem counter-intuitive, paying for the small things yourself can actually save you money. You can even transfer your no-claims record if you switch insurers.
Don’t just accept what you are presented with
If you just go along with the policies proposed by your mortgage lender, you’ll almost certainly be spending more than you need. Use a comparison website to shop around for insurance that suits your requirements.
Protect your home from damage
Don’t assume that because you’ve got building insurance that you’re covered for whatever might happen to your home. If the damage is the result of neglect or wear and tear, then you won’t be covered. You also won’t be covered for accidental damage, such as putting a nail through a water pipe, unless you specifically pay for accidental cover and that of course will cost you extra. Maintain your home and don’t just assume the insurance will pick up the bill. Although you will be covered for damage and theft resulting from burglary, it will put up the cost of your premiums, so it makes sense to make sure that your house is as secure as possible.
Collaborative Post
Leave a Reply