Julie Owens, who is head of home insurance here at moneysupermarket.com, is with me just to explain what exactly you will be asked, and [provide] hints and tips on how you can bring the premiums down.
Q1: So Julie, if we can just start from the basics, if you need to get a quote for buildings and contents insurance, what are the key pieces of information you are going to be asked?
JO: Well firstly you are going to be asked all the usual questions about you – which are the easy ones I guess to answer – but also then we’ll move through and ask you questions about the property itself. And that will include things like the number of bedrooms, the year the property was built, the type of construction it is, if it’s brick or slate tile roof etc, and also if it been subject to subsidence and/or flooding.
This is so the insurer can build an accurate profile of your house and the area it’s in and actually consider whether they would like to quote for that risk. For example, some insurers may not want to quote for more unusual properties such as thatched roofed properties, so it’s just for them to build up an accurate picture
Q2: And then there are other thing about the property, such as whether you have got window locks, what types of locks you have got on the door, is there a burglar alarm, are you in a Neighbourhood Watch area. Again, presumably this is all to do with security and therefore the more of these things you have got, the lower the risk there is. What impact does that have on the cost?
JO: Absolutely, you are right, the more protection you have, the lower risk you present to the insurer and therefore the lower your premium. For example, if you have got a NACOSS-approved burglar alarm [then] that can discount your premium by up to 7.5%. Similarly, if you are in a Neighbourhood Watch area, that can reduce your premium by up to 5%, obviously if it is active Neighbourhood Watch scheme.
With things like locks on windows and doors, often it can be the case between the insurer willing to quote because you have got all of that extra protections, and actually not providing a quote if you haven’t.
Q3: Then the other key thing is obviously the amount of cover that you need. There are two aspects of home insurance; there is buildings cover and there is contents cove. If we start with contents first, because it’s slightly simpler. To work out the value of your contents, I think a lot of people often underestimate the value of the belongings in their home, but it’s really important to get it right isn’t it?
JO: It’s absolutely vital not to be underinsured on your contents, because if you are the insurer can and will apply a condition of average. So, for example, if you have said you have only got £20,000 worth of contents but actually the sum insured should be £40,000, you will only be paid 50% of any claim that you present to the insurer because you are underinsured by 50%. So it is vital that you get that right.
The way moneysupermarket.com helps you to do that is to suggest that you actually produce a content checklist, so actually go around your property and itemise all of the contents within it on a checklist – a value sheet that we have on the site for you to access – and that will allow you to build up a picture of exactly how much you have got in contents in your property.
Q4: I guess the other thing is to remember to update the value of your contents if you do make a new purchase.
JO: Yes, absolutely. Always have that in mind when you buy anything new, particularly significant items for your home such as a new TV, for example. Think about updating your content sum insured and actually think about whether you need to specify if as a high value item.
Q5: And on the buildings cover element, obviously if you are living in rented accommodation you won’t need that because your landlord will get that, but if it’s a property you own or have a mortgage on you will. Now, you are asked for two values, aren't you? The value of the property as a resale value but also the rebuild value, and that’s different isn't it?
JO: Yes it is. The market value is obviously one value that will be asked on the site but the rebuild value is the more important value and this is the one that is important to get correct.
This is the cost of rebuilding your house from scratch as it where, obviously if the worst were to happen and there be a total loss of your home. So the way to do that – and it can seem very complicated – but the way to do it is, we provide a link on the site to the Building Cost Information Service which will allow you to calculate the rebuilding cost value of your home. And the way it does that is it actually helps you to work out the external floor area and actually apply a cost per meter squared for the rebuilding value.
The reason it is asked is that it is a lower cost, it will result in a lower premium because obviously it will cost much less to rebuild the house than the actual market value of your home.
Q6: There are other elements of cover that you can have or not have; accidental damage and personal possessions. Can you just explain what they are, to help people work out whether or not they need them? So, if we start with accidental damage, what does that cover give you?
JO: Well accidental damage is more of an all-risk type of cover. There is two types of cover; there is standard perils, which is cover for fire, flood, theft, subsidence, and then accidental damage will cover you for accidents that arise.
Q7: So if you knock a drink over the telly or something like that?
JO: Exactly. Over and above those perils if you like. It’s paint spillage on carpets, DIY accidents, water damage to appliances, the nature of the cover is for that.
You have to look at the wording from the insurer and the exclusions, because there will be some things that aren't covered under accidental damage. One thing would be damage by pets, for example, so that is still an exclusion even with accidental damage cover.
Q8: So I guess its the sort of thing that, if money is tight and you wanted to keep your premiums down as low as possible, you might decide not to take it, but I’m guessing for a lot of people it’s probably the cover that they are most likely to claim for.
JO: Yes and I think it depends on your individual circumstance. Certainly if you have got a family of young children, where those kinds of accidents we have just run through might be more prevalent, then actually it’s going to be cover that you should give serious consideration to taking out.
Q9: And what about personal possessions, what is that?
JO: Personal possessions are the items that you carry about, that you are taking outside of the home. It’s cover for them whilst they are outside of the home.
Q10: So cameras and things like that?
JO: Yes, cameras, jewellery, mobile phones, items such as that. You can buy a personal possessions add-on to the policy that will give you cover limit for those items.
Q11: And if you have got a valuable piece of jewellery or very expensive camera equipment, or something, you need to specify those individually, don’t you?
JO: That’s right, that would be called a high risk item and you would need to specify that with the insurer and also decide whether you would like personal possessions cover for that item as well if you are going to take it outside of the home. It’s very important that the insurer knows all of the detail about that item and obviously that you keep receipts for that item.
Q12: The other thing to remember is the excess, because you will have to pay an excess on both your building and contents policies, and that can vary, so it is important that you know what it is before you sign up.
JO: Yes they do vary and they vary for contents and buildings cover, and it is important that you know what the standard excesses are. If you do elect to up those excesses or have a higher voluntary excess, then you could reduce your premium by up to 20% but it’s very important that you understand that that is the element of the claim that you will be paying before you actually opt to take those excesses.
CF: Great, Thanks Julie