How will a home insurance claim hit my premium?

As the clean-up of last week’s storm continues, those who’ve made a claim may be wondering what impact it will have on their premiums next year.

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The bad news is, if you’ve had to make a claim, your insurer is likely to bump up the price of your cover, even if you have a protected no claims discount. Here, we explain how to keep your costs in check….

Be prepared for higher costs

Making any form of claim will usually raise the cost of your home insurance premiums the next year, typically by around 10% to 15%, although this can vary widely depending on what sort of claim you’ve made, and on your insurer.

The more claims you make, the higher your premiums will be, as you’ll be considered to be a higher risk proposition by your insurer. So it’s a good tactic to think carefully before making small claims, as these are likely to prove costly in the long run.

Even if you have paid to protect your no claims discount, you could still find yourself paying higher premiums the next year. That’s because you pay to protect your discount, rather than the amount of the actual insurance premium.

In other words, you’ll still get a discount, but the percentage reduction will apply to a large base figure.

Never automatically renew

But the key thing to remember is that you should never just accept the renewal quote offered by your existing insurer, as you may be able to find a much cheaper deal elsewhere. There is rarely any reward for remaining loyal to one provider, so you should always compare lots of different quotes before selecting a policy.

If you have recently made a claim on your home insurance and want to switch to a new provider, you can still do this, but any new insurer will usually ask if you have made a claim in the previous three years.

According to MoneySuperMarket, one in 10 people shopping around for home insurance could save up to £200 a year compared to their existing deal. 

Kevin Pratt, insurance spokesperson at MoneySuperMarket, said: "We all know what it’s like – you’re given the opportunity to automatically renew your home insurance without lifting a finger, and it’s a very tempting proposition. But it only takes a few minutes to compare a range of quotations and there might be big savings to be had, so you have to ask whether it’s worth paying a hefty price for the convenience of letting the policy renew on the nod.”

Combine buildings and contents cover

You should be able to reduce the cost of your home insurance by taking out contents and buildings cover from the same provider. Discounts of 10% or more are on offer.

If you have separate policies with two insurers, you might have different renewal dates – but if you want a combined policy, the new insurer will arrange cover as required to enable you to coordinate the cover you need.

Consider increasing your excess

The excess is the part of any insurance claim which you must pay yourself. With home insurance policies, there are two different elements to the excess. The first part is a mandatory amount which cannot be changed, but there is also a voluntary excess, which you can decide on and can be as much or as little as you are happy to pay.

The mandatory part of the excess is usually between £50 and £100 for a buildings or contents policy, but you can choose to have a voluntary excess of anything up to £400 or £450. There is normally a cap on the voluntary excess.

Raising your excess will reduce your premiums because, if you do make a claim, your insurer won’t have to pay out so much. However, don’t make the voluntary excess so high that you’d struggle to make a claim at all, otherwise this defeats the point of having insurance in the first place!

Improve your security

The safer your property is, the lower your premiums are likely to be. It’s therefore a good idea to consider installing a burglar alarm if you haven’t already got one, and it’s often worth installing security lights and signing up to your local Neighbourhood Watch scheme too.

Always check which alarm system your insurer prefers before installing one, as you’ll need to have an approved system to reduce your insurance premiums.

Get your sums right

When buying home insurance, make sure you take out the right amount of cover. That means working out exactly how much buildings and contents cover you need, or you’ll risk ending up over or under-insured.

The amount of buildings cover you need is based on the re-build cost of your property rather than its actual market value. You can find your property’s re-build cost on your survey report, or the ABI has a re-build cost calculator at http://abi.bcis.co.uk/.

When working out how much contents cover you need, it’s a good idea to go from room to room and jot down the value of the contents in each so you can then come up with an overall figure. If you don’t do this and end up over-estimating how much cover you need, you could end up paying more than you need to for your cover.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct

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