Spring clean your home contents insurance

Published 18th Apr 2007

Switching utility providers has become an everyday occurrence for the majority of homeowners since energy tariffs started creeping up and up, but that shouldn’t be the only household expenditure that you consider shopping around for.

At this time of year, in the wake of expensive Christmas presents or a juicy January bonus, it is wise to spare a thought for your home contents insurance. Most people tend to stick with their existing provider out of sheer laziness, with homeowners preferring to make one quick call and renew their cover, thus bypassing large volumes of time-consuming paperwork, rather than investigating the alternatives.

Unfortunately for the guilty majority there is not much to gain from loyalty where insurance is concerned. The market is currently teeming with offers though, so this does not have to be a bad thing; Saga are offering to pay up to £25 of new customers’ standard transfer charges, Tesco offer a 35 per cent discount just for applying online and a further 5 per cent if you also take out car insurance with them, and Halifax also offer 25 per cent off when applying online.

These are just the tip of the iceberg as far as offers go, but the examples are indicative of a market burgeoning with money-saving deals.

‘Shopping around’ might be becoming a bit of a clichéd term, but researched conducted by Tesco last November showed that most homeowners are spending an average of 25 per cent too much on their insurance purely because of this reason – they just aren’t shopping around.

The base rate increase last month and the increasingly unstable future of interest rates means that your mortgage repayments might become much more of a burden, but changing to a cheaper insurance policy and thus freeing up a good chunk of extra cash can really help to take the pressure off.

Moneysupermarket.com allow consumers to compare premiums from 60 providers, although individuals comparing only 5 side by side will more than likely turn up a 35 per cent saving, says director of insurance Richard Mason.

However, he does not believe that these introductory discounts are all they’re cracked up to be, cautioning: “Most insurers rip off customers on renewal. This is because they offer a discount to new customers but need to claw this back in year two to make a profit. Therefore my simple rule is this, refuse to pay any more on renewal if you did not make a claim.”

A new offer from MORE THAN does just this – rewards customers who do not make a claim with the equivalent of a 30 per cent saving. The company is offering customers a unique two-year fixed price option which gives them the third year free if they do not make a claim within the previous 24-month period.

Ultimately, insurance is based on risk. A fair proportion of the price is determined by your postcode as, strictly speaking, more run down areas will be prone to burglaries and vandalism. Although taking several other simple steps to make your home more secure can have a knock-on effect on your premiums.

By eliminating these extra risk factors you can stop your insurance from soaring – make sure your locks and alarms (burglar/smoke) are in good condition and fully functional – a dodgy lock or smoke alarm could be the difference between a safe, protected home and a hefty insurance claim.

If you work from home or if somebody is normally in during the daytime, this could also affect the price of some premiums as most burglaries tend to happen in the daytime when it is obvious no one is home.

Moneysupermarket.com also offers consumers tips to save on their insurance premiums, including increasing the standard policy excess to bring down annual costs (although remember that in the event of a claim you will be agreeing to cover more of the cost), and making the most of no claims as the overall premium will work out cheaper, plus the fact that some companies may offer a discount of up to 20 per cent.

However, changing your contents insurance isn’t all about securing yourself a cheaper deal. It is important to make sure you are comfortably covered so that if anything did happen to your home, you would not stand to lose out through under-insurance. As with most things, it is better to be over-prepared than under-prepared.

Another big factor is that snow-melt and increased rainfall in the early months of the year will elevate the risk of flooding in certain areas, and if your property is hit when you don’t have a comprehensive policy there is a far higher chance that your belongings won’t be the only thing getting a soaking.

If unsure about anything, check your existing premium and go through the terms and conditions with a fine tooth comb to check for both cancellation penalties and anything that might indicate you don’t have the right level of cover.
Mason adds: “While buying insurance is essential for financial security and all-round peace of mind, it is important that you only opt for a level of cover relevant to your needs and at the best available price.”

Nowadays, policies can be bought almost everywhere. The usual providers are banks, building societies and insurance brokers – all of which offer services online – but increasing numbers of supermarkets and high-street retailers are getting in on the act too, offering great deals for new customers. It is worth paying your premium in one annual lump sum rather than in regular instalments as it can work out cheaper this way.

Make sure you calculate your insurance room by room, item by item, and don’t sweep belongings into groups of like valuables or use a ‘method’ designed to simplify the calculation – make sure that you account for each costly item separately, the key is working out how much it would cost to buy new today.
By Ariane Buteux

Source: ' Personal Finance & Savings '

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