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Getting older does have its advantages, especially when it comes to saving on your home insurance. This guide will help you find out how.
On average, an annual home insurance policy covering both buildings and contents cost around £143 in February 2020, according to MoneySuperMarket data.
Those over the age of 70 are often able to spend less than that on their policies, however. Prices of combined policies differ according to factors such as location, type of property and the times of day the home is occupied – and average annual costs across the country can vary by £70 or more.
It doesn’t have to be! Home insurance policies can be significantly cheaper for the over 70s if you take certain sensible steps to minimise your risks. Insurance companies use statistical analyses to assess risk and these analyses tend to place older people in lower risk categories.
Older policyholders are generally seen by insurers as more attractive customers as they tend to cost less and are often very loyal.
Research conducted by insurance providers has shown that claims made by older people tend to be for smaller amounts, and that older people make claims less frequently than their younger counterparts. The statistics also showed a stronger trend toward honesty regarding the value of lost or damaged possessions in those over 70.
Insurance companies have been known to allow customers, especially older ones, to pay dearly for loyalty – the so-called “loyalty premium” – raising the price of a policy every year and reserving the best deals for new customers.
Shopping around for a new policy every year, though time-consuming, can yield real savings. The loyalty premium hits older, less tech-savvy customers particularly hard, so even if you’re not yet of pension age, it may be a good idea to help any older friends or relatives get a better deal.
The loyalty premium is a term used to describe the higher price that loyal, existing customers pay for a product compared to new customers. It is also known as the “loyalty penalty” because longstanding clients are effectively punished for continuing to give a provider their business, while new consumers are rewarded.
Because consumers in this demographic are seen as a lower risk, less likely to inflate the value of losses and less likely to claim, you may find you have access to a greater range of home insurance products once you hit your 70s.
You are also able to take advantage of the discounts and incentives offered by specialist companies such as Saga and Age UK.
Many homeowners over the age of 70 will own their home outright, but it is still advisable to have buildings insurance in place to cover the cost of any damage to the structure or fixtures of the property, such as a tree falling on to your house.
Anyone who has a mortgage must have buildings insurance that at least covers the cost of their home being rebuilt. This is a requirement of mortgage providers to ensure that their loan is safeguarded. Even if you are 70 or over, if you have a mortgage on your property, you will still need buildings insurance.
As with most flats, buildings insurance policies for retirement flats are generally communal and included in the maintenance or service fees you already pay.
Again, as with flats, apartments and similar dwellings in the non-retirement sector, home contents insurance – although not compulsory – is highly recommended.
Unlike buildings insurance, which is usually a mortgage lender stipulation, it is not compulsory to have contents insurance. However, a good look around your home will highlight just how costly it would be to replace your possessions.
As well as the big-ticket items like televisions or jewellery, many older people now own at least one portable device like a smartphone or a tablet, or have invested in active retirements and ongoing good health with items like bikes and costly in-home fitness equipment. The contents of your home may represent a lifetime of acquisition so the cost of repair or replacement might be almost as high as any sentimental value.
Having both types of home insurance doesn't mean paying double for your policy as many insurers offer discounts to those who buy combined policies.
In addition to the discounts from being in a low-risk group, older people can access greater buildings cover too. This is because insurers acknowledge that this age group is likely to live in larger, and often older, homes.
People over the age of 70 are often offered higher levels of contents cover, too, as they often own more valuables. Crucially, if you’re over 70 you can often take advantage of policies that offer new-for-old terms of replacement. This means that an old TV would be replaced with a modern model, for instance.
Many people underestimate the cost of their belongings and even how much it would cost to rebuild their home in today's market. The Association of British Insurers can offer advice on calculating the cost of a rebuild, but for contents insurance it's best to spend some time writing down the contents of each room and estimating the cost of replacing less obvious items - such as clothes, curtains and carpets.
When you have a figure for your contents insurance use the MoneySuperMarket home insurance comparison tool to get quotes and compare policies. Err on the side of caution and add a little on to your contents figure as it's better to be a little over-insured than under-insured.
When it comes to getting the best deal on your home insurance, it always pays to know what you’re buying, and that it doesn’t cost more than necessary! Check all of your existing insurance documents to ensure you are not paying twice for cover that is included in another policy you already hold. Before purchasing cover, ensure you read the terms and conditions in order to fully understand any exclusions.
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