Home insurance is not something the prudent person ignores. Most of us have everything we own in our homes and the idea that it could all be lost to fire, theft of some other calamity that could otherwise have been insured is a sobering thought.

Home insurance for the homeowner with a mortgage is mandatory. Mortgagees will insist that the building they have lent you money to buy is insured for all usual risks. These will usually include fire, flood and subsidence, storm or a falling tree, etc. The home is usually insured not for its value but for the estimated cost of reinstatement which may well be different.

Whether you are a homeowner or not, you should consider home contents insurance. This does not cover the home itself but does cover personal chattels (TV, furniture, etc) and perhaps valuable individual items (such as a watch, cycle or engagement ring). In most cases home contents cover will be set based on your estimate of the value of your home’s contents plus any specific items you wish to insure that are worth more than a fixed sum (usually £1,000 - £2,000 or more). According to the Association of british Insurers, the contents of the average three-bedroom home are worth between £50,000 - £60,000!

Bear in mind that if you insure your home for £45,000 worth of contents (perhaps to reduce your annual premium) then at the time of a claim an actuary may decide that you actually had £60,000 of contents and that you were, therefore, under-insured by 25%. On this basis, a £10,000 claim may result in you only receiving 75% of the claim due to what is called the ‘average clause’.

It is usual for accidental damage to be an additional ‘bolt-on’ option for home contents insurance. In addition, home insurance policies might also offer you a variety of optional extras including; legal cover, personal indemnity, public liability insurance (in the event that your cleaner or window cleaner injure themselves whilst working at your home) and a variety of other risks. Of course, for every additional risk you insure against, you policy’s premium will increase.

A reduction in your premium can be achieved by shopping around. Pay annually if you can, rather than paying monthly and being charged for the privilege. Consider increasing your voluntary excess to a manageable sum. This means you will need to pay more before a claim is met by the insurer, but this limit on their risk should also reduce your annual premium. Limit your claims to larger items. Most insurers offer a No Claims Discount, so not claiming for a £300 item might be sensible when you have a £200 excess and a No Claims Discount to lose!

Finally, take personal and professional advice! Every policy is different and every risk needs to be properly assessed. For example, if you live in an older home and a wall falls over, an insurer may claim that the cause was wear and tear or poor maintenance (something that won’t usually be covered under a home insurance policy).

Make sure you know the risks and what cover you have!

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