As the recession continues to take its toll, it’s more important than ever to ensure you’re not paying over the odds for cover. Recent findings show that British householders are overpaying on their home insurance by £1.3 billion per year*, and that almost 58 per cent of UK homeowners have not reviewed their policies in the last three years.**
No reward for home insurance loyalty
While it may be tempting to automatically renew your policy with the same provider year after year, this kind of complacency makes little financial sense. Insurers know most customers will do so without looking at what else is on offer, so tend not to pull out all the stops in a bid to keep your business. Instead, they concentrate on offering the most competitive prices to new customers.
Shop around for a better home cover deal
As insurance premiums can vary considerably, the golden rule is to spend time shopping around; you may be surprised at just how much you can save in a pretty short space of time. When doing your research, don’t forget to look at the level of cover as well as price, as the cheapest deal may not necessarily be the most comprehensive.
Top tips to cut the cost of home cover
* Shop around using an insurance comparison site to see if you can bring down the price of your premium. Just a few minutes tapping away on your PC could result in savings of over £180.***
* Don’t jump at the home insurance policy offered by your mortgage provider without checking whether you can get a better deal elsewhere, and don’t assume you have to take buildings and contents cover with the same provider. Search for the cheapest individual buildings policy and then for the cheapest contents policy.
* Further savings can be made by paying the whole year’s premium annually rather than monthly, and by increasing the voluntary excess.
* Be aware that while under-estimating the value of your contents may have the attraction of cutting the cost of your policy, it could be disastrous if you have to claim. For more information, read what not to forget when applying for home insurance.
* Also ensure that you’ve got your ‘rebuild cost’ right. Many people think that rebuild cost is the same as the market value when it is really a lot less. A rebuild calculator will work this out for you automatically.
* Security improvements: a few additions to your home can also help you cut costs, such as installing a good alarm system, putting five-level mortice deadlocks on external doors, and adding key-operated locks to all accessible windows.
* Safety improvements: for a relatively small expense you can also fit smoke alarms and fire extinguishers – all of which can significantly reduce the price you pay.
Help with getting through the quote process
Finally, make sure you have your old insurance documents to hand when going through the quote process as this paperwork can be used for reference – and will save you from running around the house when asked what type of locks you have on the doors.
You can find more useful tips on reducing home insurance premiums here.
*Assumptions used – 44 per cent (source Mintel) of 16 million homeowners who have not reviewed their home insurance in the UK multiplied by the average home insurance saving by the Confused site customers in 2008 of £185.25.
**Mintel Home Insurance report 2008 and Mintel Aggregator report 2008.
***24% of customers who received a home insurance quote between 1st January and 31st March 2009 and provided a best alternative price saved over £180.74.