Common myths about home insurance
There are lots of myths about home insurance which can make choosing a policy very confusing. We’re sure most of you would probably admit that you don’t spend much time reading the small print when you take out a policy. But it is really important you know what you’re covered for – and what’s not included.
In this article, we try to dispel some of the myths to help you find the right policy for you.
I have unlimited contents, surely that means everything’s covered
You may have unlimited cover on the “general” contents but there are a lot of inner limits applicable to all household policies. These include:
- Valuables are restricted, usually by a fixed amount in the region of £25,000 and then, within this maximum, there will be a limit for any single item at £2,500.
- Contents that are kept in a garage/outbuilding or left outside i.e. garden furniture usually have a limit of £1,500 to £2,000.
- China, ornaments and delicate items are limited in both the amounts you can claim and the cover for them – accidental damage is almost always excluded.
- Claims for items stolen from a vehicle or a hotel room would be limited to around £1,000.
- Camping equipment is a general exclusion under a lot of policies so if you want it covering you need to check it is under the policy being offered.
- Loss or theft of money is limited to around £500.
- Business equipment – a lot of people now work from home or have a home office. Nearly all policies will cover business equipment as standard but the limits vary from £1,000 to £5,000 so again if you need cover for this, make sure it is enough.
- Pedal cycles is another grey area. Some insurers will class them as general contents, others as personal effects and others as standalone items. Unless they are specified, cover is limited up to £500 in most cases so if you have a bike and want it covered, make sure to mention it or check which section it comes under to see if you need to specify it. If you have an electric bike, make sure to double check as a lot of Insurers will not cover them.
Personal effects confusion
This is a big issue with clients not understanding what this means when asked if they want it.
Most Insurers will define personal effects as items that are worn or carried about the body i.e. mobiles phones, hand held devices such as a Nintendo Switch, laptops, tablets, hearing aids, glasses.
These are NOT classed as general contents therefore unless you add the personal effects extension which also then covers these items when away from the home you would not be covered. The latest mobiles cost around £1,200 to replace a handset, hearing aids around £1,500 each. Cover would cost in the region of £25 to add £1,500 of personal effects cover so it’s certainly worth considering.
What is an excess?
This is an amount that is payable by yourselves in the event of a claim. Policies tend to have a fixed excess of £100 for general claims, £250 for escape of water claims and £1,000 for subsidence. If you choose to increase the excess in exchange for a lower premium this is then classed as a voluntary excess and in the event of a claim (excluding subsidence) both the policy and voluntary excess would be deducted from any claim payment.
It is worth mentioning that the savings made by taking a voluntary excess do not always warrant it so, if you are happy to have a bigger excess, start with a nil excess and work your way up to see what the savings are.
Standard or accidental damage cover
All policies include cover for fire, theft, escape of water, flood, and subsidence unless your policy is endorsed to say otherwise.
If you have a standard policy then you would not be covered for any damage caused by an accident – this could be dropping something on the floor, spilling paint on your carpet, knocking your TV over, putting your foot through your attic floor, nailing something to the wall and hitting a pipe. Ass these are all caused by accident then you would need to add the accidental damage extension to be covered. This can increase your premium by quite a bit but if you have young children or are of a clumsy disposition then it’s worth investigating, especially on the contents as this is where most accidental damage claims are made.
Are valuations necessary and worth it?
In short yes, they are there for your benefit only.
Insurers generally ask for items that need to be valued to have a valuation dated within the last 3 or 5 years.
This is due to the nature of these items predominately increasing in value year on year and it is likely you will have these items specified on your policy for a nominated sum.
It is your responsibility to ensure that the amount you specify is enough to replace the item on a like for like basis. Having a valuation both proves this value as well as the fact that you own the item in question.
If you do not insure the item for its full value then you would lose out financially if you needed to make a claim as what you specify is the maximum they would pay regardless of what it may actually cost. This differs from your general contents which are usually on a new for old cover so the cost of the item when new does not come into account when replacing it even if it costs twice as much.
We would always recommend taking photos of any valuable or unique item as this will help with the claim process and speed up your Insurers enquiries. Again it proves the ownership of the item.
Do you have a wind turbine, a listed tower, a small army of farm animals, public footpaths running through your land, a bridge connecting your house to the road, a septic tank, stable block, or a helipad?
These would NOT be covered on your standard off the shelf or online policies and would need specialist cover predominately for the liability aspect. The market for these risks is a lot smaller but not necessarily more expensive and these policies can be tailored even more as they are “built from scratch” just for you.
Home insurance add-ons
A lot of providers now offer legal cover and home assistance. These cost as little as £15 each and are well worth the extra cover. The home assistance can cover up to £1,000 per claim to help with fixing broken windows, blocked pipes, replacing door locks, removing wasps nests and other pests, boiler and heating problems and the legal cover helps with property disputes i.e. boundary issues, problems buying domestic goods, tax investigations, property purchases or sale and employment disputes.
Asking for information
When looking at insurance policies and what they typically exclude we found that a lot of clients are not protected well enough yet do not realise this due to the generic questions that are asked by Insurers. Therefore, we always ask additional questions to dig a bit deeper in order to truly get a feel for your needs. This would include asking if you have solar panels, hot tubs, ride on mowers, quad bikes, septic tanks, what you keep in your garage, if you have any land attached to your house, own any mobility aids, guns, fishing and camping items, what hand held devices you own, do you need cover for any contents for your children at university, cover for contents of parents in care homes.
These are the type of contents that can be a bit of a grey area so if you have them and want them to be covered you need to be checking that the Insurer quoting provides the cover. Not all of them cost an extra premium to cover, it’s just a case of checking the policy wording to see if they are already on there and finding the policy that meets those requirements.
We hope this has dispelled some of the myths surrounding home insurance. If you have any questions or would like to discuss your home insurance policy, please contact us today.