Article by David Thomson
Good news for the consumer is that a keenly competitive market has made available a wide range of cheap house insurance. As with any consumer goods or services, however, it is important to remember that cheap does not necessarily mean the best. Probably a better yardstick, when choosing house insurance, is to look for good value for money rather than a cheap product that might let you down when you most need it.
That said, home insurance • ” which will include both buildings and contents insurance • ” is inherently cheap when set against the value of the assets it protects. The home is most people’s single biggest investment, after all, and protection against the ever-present risks of fire, flooding, subsidence or storm damage make it more than sensible an asset to protect. Indeed, if a mortgage is involved, then the mortgage lender will insist on the insurance of the fabric of the house itself (i.e. buildings insurance) as a condition of advancing the mortgage.
Although the lender will insist on buildings insurance being in place, this does not mean that you have to buy the house insurance from the bank or building society advancing the loan. In fact, if you are looking for cheap house insurance you will probably find that the lender’s product is more expensive • ” since they will also be taking a commission on its sale • ” than standalone house insurance from a reputable, independent insurance provider. This is where an independent insurance broker’s advice can also prove extremely useful in matching your precise needs to the best • ” and cheapest • ” of the competing products available.
Some homeowners will discover to their bitter cost the perils of buying cheap house insurance by deflating the premiums they need to pay as a result of under-valuing the house itself. There is no short-circuiting the fact that house insurance must be based on the cost of completely rebuilding the property in the event of a disaster. This insured sum will be the total amount that the insurer will be prepared to pay against any claim. The effect of this, in the event of the very worst happening, therefore, is that if you have under-valued the property, there will not be adequate compensation to have it rebuilt. More than this, the insured sum will also determine the amount paid against lesser claims. These will be decided by the insurer on the basis of a proportion of the total sum insured. If the property is under-insured, therefore, the result of any claim will also be disappointingly inadequate.
The best way of ensuring that you obtain cheap house insurance is by helping yourself and the insurer by mitigating the risks to the property. Guard against theft, for example, by fitting security alarms, upgrading all locks, installing timer-controlled lighting and joining your local neighbourhood watch. Fit • ” and properly maintain • ” smoke alarms. Consider increasing the compulsory excess written into your policy by taking on an additional voluntary excess. Claims-free policy holders are, of course, insurers’ favourite types of customer. Some companies will recognise as much by offering no claims discounts of up to 20%, thus bringing cheap house insurance within the grasp of even more home owners.
About the Author
David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best insurance deal on their home insurance, car and life insurance.