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Do I need Life Insurance?

Please note that the information provided here is of a general nature only and for more detailed advice on what you are covered for you must refer to your policy or to your insurance company.

What does household insurance do?

There are two types of household insurance policies....

  • Buildings insurance protects you against damage to the structure of your home together with its fixtures and fittings
  • Home Contents insurance protects you against damage or loss of the possessions that you would normally take with you if you moved.

Both policies cover you against a stated list of perils for example; fire, subsidence, theft, flood and storm, as well as providing important cover for your legal liabilities as a homeowner and occupier.

Buildings Insurance

A buildings insurance policy covers both the structure of a property and its permanent fixtures and fittings such as baths and toilets, fitted kitchens and bedroom cupboards. Interior decorations are covered also. Buildings Insurance usually extends to include outbuildings such as garages, greenhouses and garden sheds but depending on your policy boundary walls, fences, gates, paths, drives and swimming pools may not be covered.

There are a number of events that buildings insurance normally covers. These are often referred to as insured perils. Most policies will cover damage to your home by:

  • Fire, explosion, lightning or earthquake
  • Subsidence, heave or landslip 
  • Storm and flood
  • Theft or attempted theft
  • Escape of water from tanks or pipes
  • Falling trees or branches
  • Breakage or collapse of television, radio signal or satellite apparatus
  • Riot, civil commotion, strikes, labour or political disturbances
  • Impact by aircraft, other aerial devices, any vehicle or animal
  • Escape of oil from heating systems.

Where can I buy buildings insurance?

If you have a mortgage, you will have no choice but to have buildings insurance. And your lender will probably be only too keen to provide it - at a cost.

It is usually wise, however, to shop around through brokers, the internet and individual companies, as the amount you will be asked to pay for the same cover will vary widely.

You need to insure the rebuilding cost, not the value of your property.

Premiums will be lower for detached houses, and higher for terraced houses and flats. Your mortgage lender will tell you how much to insure when you take out your loan. Otherwise, ask a surveyor.

You will generally be covered for fire, flood, water damage and other hazards. Malicious acts, such as vandalism, may also be included. Accidental damage is usually an optional extra (but one which you should go for), with family legal protection another possible add-on.

You may get a discount if you buy combined building and contents insurance and also if your home meets your insurer's security requirements, including specific types of window and door locks. It may also be beneficial to agree to a deal lasting more than one year, although it is a good idea to include an opt-out if rates are increased.

Must I buy both policies from the same company?

You do not have to insure your contents and buildings with the same insurance company. The household insurance market is very competitive and it is always worthwhile shopping around.  However, using the same company may help to streamline claims handling if you suffer damage to the building and its contents.

Shopping around is the only way to get the best deal, but don't just consider the price. Look at what the policy covers and make sure it meets your needs.

Contents Insurance

Standard home contents insurance covers possessions in your home, such as furniture, televisions and clothes, against a variety of risks, including fire, theft and weather damage.

Some policies cover accidental damage, as well, but if you want to be extra safe its best to take out all risks insurance, which protects against accidental damage and covers items such as cameras or jewellery outside the home.

Exclusions These explain what your policy does not cover. You should read your policy to be sure you are clear about the cover it provides. If there is anything you do not understand, ask for an explanation from the provider of the cover either a broker or the direct insurer.  The most common exclusion on contents insurance is theft if you have let or sub-let your house.

Some policies contain an excess which requires you to pay a certain part of a claim yourself. Excesses are applied to a variety of claims, so its best to check the small print when you buy your policy. Some insurers will offer you a lower premium if you agree to excess clauses for some items.  In the event you make a claim you may be required to pay the first part yourself - this is called an excess. Excesses are applied to a range of claims. Check these when you buy your policy and at each renewal date.

If the idea of calling round insurers and getting quotes fills you with horror, it might be worth sending your details to an insurance broker who will do it all for you. Most brokers can give you a quote over the phone and many have started web sites which let you fill in your details online. A much quicker, cheaper and easier way to compare quotes these days is to do it yourself online.

Most will just send you the lowest quote, so if you have specific insurance needs, such as valuable art work, be sure to tell them you need a specific type of cover.

If you decide to go to a broker it is worth finding out how many insurers they send your quote to. Some use a panel of only a handful of insurers, others send your details to a wider range of contacts.

If you own your home you may have arranged your building, and possibly even contents, insurance through your mortgage lender. You are not obliged to buy your insurance through them and you are likely to get a better deal elsewhere. 

Extensions of Cover - The risks for which you are covered are listed in your policy. However, for an additional premium, you can widen your policy to cover "accidental damage".  Under a conventional contents policy ("indemnity" or "new for old") your carpet, for example, would be insured if it were burned, damaged by leaking water or ruined by malicious vandals. It would not be covered if you spilt a tin of paint on it. This is known as accidental damage and can be a valuable extra protection.

"All Risks" is cover for items which you regularly take out of the house such as binoculars, cameras etc. These can be listed in the policy under an "All Risks" section, again an extra premium is payable.

Paying your premium - Many insurers will allow you to pay in instalments ? but you must keep up the payments or cover will stop so be clear on the requirements of the policy you are considering before you sign up.

No-claim discounts - Some insurers operate a no-claim discount system when policies are renewed with them. Check on your renewal notice to see if this applies.

Security - Some insurers require the installation of approved alarms and/or minimum-security fittings before providing cover. Check whether this applies.

How do I make a claim?

  • If you have suffered from theft, malicious damage or vandalism, tell the police immediately.
  • If you have lost credit cards or cheque cards, tell the company that issued them immediately, a delay of even a few hours could prove expensive for you.
  • All insurance policies set out clearly the risks they do and do not cover. Read your policy and make sure that the loss you have suffered is covered by your policy.
  • Decide which policy ? buildings, contents or both - to claim under. If you are not sure, telephone your insurer for advice. Many insurance companies provide telephone helplines for policyholders facing an emergency. They can give you the names of good tradesmen for emergency repairs and, of course, give detailed advice to those having to make a claim. Your policy document gives you a contact number.
  • Ask your insurance company, building society or insurance adviser for a claim form.
  • Complete the form as soon as possible and return it with, where available, estimates for the cost of repair or replacement of the damaged property. 
  • If you have a replacement as new/new for old policy you can claim for the full cost of repairing your property or replacing it with new items if they have been stolen or destroyed.
  • If you have an indemnity policy then you must deduct an amount to represent wear and tear on the claim form.
  • If you find it difficult to get estimates quickly (for example, if damage is widespread in your area as a result of flooding, builders and plumbers may be hard to track down), send the claim form to the insurance company straight away and tell them you will send estimates as quickly as possible.
  • If temporary repairs have to be done to prevent further damage, arrange for the work to be done and keep bills. The cost may form part of your overall claim.
  • It is important to keep damaged items because the insurance company may want to see them. Burnt or soaked property can be kept in a shed or garage.
  • As soon as the insurance company gets your estimates it will either:
    • Pay your claim, or
    • Arrange for a claims inspector to call on you, or
    • Send a loss adjuster to handle the whole claim.
  • The claims inspector is employed by the insurance company and will arrange with you the basis on which your claim will be settled.
  • Loss adjusters and Public adjusters are independent experts with a good knowledge of the area in which they operate. They are skilled in assessing claims and in advising on the best repair and reinstatement methods. They will recommend to the insurance company the way in which your claim should be settled. There is usually no need for you to appoint someone to act on your behalf. If you do, remember you will have to pay their fees yourself.
  • Insurance companies usually want to see evidence of ownership and value of property which has been lost or damaged. It is important to keep, if possible, receipts and professional valuations. If you do not have these ask the insurance company what other evidence they will accept.

Other useful information

  • How are premiums calculated? - In setting premiums for buildings and contents cover, most insurers will start with the postcode of the property to be insured. Postcodes enable insurers to identify a geographical area, thereby allowing premiums to better reflect their claims experience in that locality.  However, postcodes have two major disadvantages ? first, the insurance industry has no control or influence over the Royal Mail?s allocation of postcodes and second, an individual postcode may contain within its boundary, areas of higher or lower risk than the average. This information is generally not known to individual companies or the industry as a whole.
  • The postcode is the base upon which insurers calculate premiums. A number of other factors are taken into account when calculating the full premium such as a policyholder?s previous claims history, the sum(s) insured and the nature of the items to be insured.
  • Not all insurers place particular postcodes in the same rating bands and competition between insurers means premiums can vary considerably for similar risks in the same locality.  It is worthwhile shopping around.
  • Liability - Householders - like everyone else - have a duty to exercise reasonable care in everything they do. If you are careless or negligent, and this results in injury or damage to someone else or their property, then you could be held legally liable for this and have to pay compensation. Contents and buildings policies cover you against this risk. The buildings policy covers you as owner of your home while the contents policy covers you as its occupier.



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