It can often feel like home insurers are trying to catch you out – and sometimes they are.
The smallest oversight on your part can lead to a reduced payout, or not being compensated at all, when something goes wrong.
Telegraph Money takes you through the need-to-know home insurance rules that will ensure a claim is successful.
What’s the difference between building and contents insurance?
This covers the structure of the building plus fixtures and fittings, including baths, fitted kitchens or anything else that could not be reasonably removed and taken to another home.
Usually these policies cover outbuildings such as sheds and garages too. Buildings insurance is normally compulsory if you have a mortgage.
This covers anything which is considered a personal possession and could be reasonably moved, ranging from laptops and televisions to furniture. The Financial Ombudsman website has an extensive explanation of what counts as contents, including carpets and other grey areas.
There are policies on offer that cover both buildings and contents, but their scope varies – so make sure to check the specifics. They are often cheaper than two separate policies, but make sure you need both elements. For instance, if you are renting then your landlord will have buildings insurance, meaning you only need to cover the contents of the property.
Things to consider
- Accidental damage: Most policies will not cover accidental damage as standard. This covers damage resulting from, for instance, leaving a tap on, or breaking a piece of furniture. You will normally be able to select it as an option at additional cost.
- High value and high risk items: In addition to the overall coverage level, you will be asked to specify a high risk amount to cover laptops, TVs and other items of value. For particularly high value items, such as watches and jewellery, you will have to specify details and value. Highly expensive individual items may push up your premium, and you could be better off insuring them separately with a specialist.
- Personal possessions cover: Another option available on many policies now is to cover personal possessions such as your mobile or laptop outside of the house, for an extra cost. It’s worth comparing whether a dedicated personal policy that serves this function would be cheaper.
- Sub-letting: Sub-letting your home will most probably not be covered by a regular policy, so you need to inform your insurer when taking out insurance or let it know if somebody moves in.
- Running a business from home: Again, running a business or trading from home without telling your insurer could lead to rejected claims. Be up front about it from the outset as you may need a different type of insurance depending on your business.
- New for old vs indemnity: There are different types of compensation offered by insurers when you make a claim. New for old allows for an item to be replaced as new, with no deduction for wear and tear. Indemnity cover involves being compensated for the value of a lost item, with wear and tear taken into consideration.
- Locks, windows and burglar alarms: You will need to provide an accurate description of locks, burglar alarms and other safety features of your home. Incorrect information could result in a claim being denied. Many insurers provide visual guides to help you determine lock type.
- Using locks, windows and burglar alarms: Having them isn’t enough: if you fail to lock doors, or don’t turn on the burglar alarm you said that you had, your insurer may not pay out. This is because their pricing is based on you making use of these devices. Your insurance policy will normally have a clause stating that it will only pay out for a burglary where force or violence has been used to gain access to your home – so if you leave the window open and get robbed, you are out of luck.
- Bedroom rated, sum insured and unlimited sum insured: There are differing methods used to calculate the level of cover. The first is “bedroom rated”, in which the insurer works out the amount of cover needed based on the number of bedrooms. The second is “sum insured” where you work out the level of contents cover required, followed by “unlimited sum machine”, in which all contents are covered without limit.
- Under-insuring: If you are on a sum insured policy where you set the level of insurance, don’t underestimate the value of your contents, as it could cut a claim amount. For instance, if you have £20,000 of cover, but the contents are worth £40,000, and you then make a £5,000 claim following a burglary, you could find the insurance company will only pay out £2,500 as only half the cover that there should have been was in place.
- Losing downloads and data: Your downloaded movies and music could be worth a significant amount, but not all home insurers offer protection for digitally owned material. Check the policy carefully, you may need to add it as an additional extra or try another insurer.
- Home emergency assistance: One option you will notice when hunting for a policy is home emergency cover, which covers things that happen suddenly and can be difficult to fix, such as a boiler breakdown or losing your keys (requiring new locks). Some will offer a 24 hour helpline to call, dedicated locksmith helplines, and in some cases using the emergency option may not even count as a claim. Only some policies offer emergency cover as standard and what exactly it entails will vary between insurers.
- Exclusions: Any insurance policy will have a number of exclusions – make sure to read these carefully in case there is something in there you need coverage for. Damage caused by DIY and from ongoing pollution are two common exclusions.
- Do not wait to fix things that can get worse: If something needs fixing that could get significantly worse – a leaking pipe for instance – you should have it fixed immediately if your insurer cannot. Waiting could lead to your claim being dismissed later on, as the insurer can argue that you knowingly allowed the problem to get worse.
- Assessment of rebuild value: If you are taking out buildings insurance, you will need to estimate the rebuild cost of your house. This is usually lower than market value as it doesn’t include the cost of the land. This should be on your mortgage valuation report, deeds to your home or on any previous surveyor’s report. You will then need to increase the figure to account for inflation, and factor in any improvements made. Hiring a chartered surveyor to produce a new estimate is another option, but it could cost hundreds of pounds. The insurers terms and conditions may specify exactly what method needs to be used.
- Listed buildings: Standard policies may not be suitable for listed buildings, but specialised listed building insurance is available. Similarly, insuring a home with a thatched roof can be difficult, and will almost certainly require specialist insurance.
- Empty home: Standard insurance policies don’t cover empty homes, which can pose difficulties if you are moving house before selling your old property. Specialised unoccupied home insurance can be made use of in such instances.
- Self-build homes: These can be complicated to insure, as you will likely need insurance to cover the construction site while the house is being built, including all construction equipment. Public liability insurance may also be required.
- Flood risk: Living in an area prone to flooding can become a major headache with regard to insurance, particularly if you are caught out by changing flood mapping. Flood Re ensures insurance remains affordable for those living in flood-hit areas.
- Specialist buildings: Other unusual buildings, such as those with flat roofs, timber frames, subsidence risk or otherwise will likely require specialist insurance.