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Inadequate home insurance can cost a fortune
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Homeowners with inadequate home insurance face paying out a small fortune on their most possession. When you buy a new house, or simply rent one, it is vital that you take out the correct level of cover. Most homeowners should have a buildings insurance policy as this will be a requirement of your mortgage lender. However, many homeowners are not taking out contents insurance leaving their home at risk from burglars, flooding, and fire damage.
If you are sensible and do take out a home insurance policy ensure that you keep it up to date. According to reports there are 3.8 million Britons undertaking home improvements such as building a conservatory or redoing a bathroom. Significant changes to your house will increase the value of the sum that needs to be insured so it is important to keep you insurer up to date with any developments.
Most homeowners are not at risk from lack of buildings cover but contents cover. Of those home owners who do have contents cover many are unsure as to what is covered under a policy and whether the full value of their possessions is covered. Britain's mania for collecting, be it books, CDs, DVDs or more unusual items is contributing to leaving homeowners exposed to insurance risks. If a policyholder took out a policy 5 or 10 years ago the level of cover in 2005 would not be sufficient due to all the purchases made since starting the policy.
A survey carried out by a leading insurance company discovered that due to the hoarding nature of the Brits the value of the nation's private collections tops £34 billion. The head of the insurer stated that it is essential that people reassess their contents insurance as the value increase with every purchase.
Tips on buying home Insurance - Shop around:
If you are buying or renewing your home insurance shop around. Insurers
specialise in different risks. One insurer will offer a more suitable product
at a more competitive price. It is particularly important to search the
market at renewal time. As a new customer you may have decided on your current
insurer due to the low premium. However, insurers will try and increase
the premium after the first year.
- Check your sum insured:
This is the maximum an insurer will pay out in the event of a claim. The
correct level of buildings cover should cover the full cost of rebuilding
the property not the market value. Contents insurance should include all
your possession inside your home. Remember to up date your policy with new
purchases to home improvements.
- Check the single item limit: Most insurers will pay up to a maximum of £1,500 but this
limit can vary according to the insurer. Inform you insurer of any expensive
individual items. It may be necessary to pay a higher premium or have separate
cover for valuable items such as jewellery or antiques.
- Where possible keep the
receipt: If you can prove you purchased something it makes the claim
far easier to process.
- Policy Wording: Check
you policy offers "new for old" cover also know as "replacement
as new" cover. This means the insurer will offer to pay the market
value if the item was new. Indemnity cover will reduce payout to take into
account wear and tear.
- Security:
Make sure you have the right security locks fitted such as mortice deadlock
or rimlock conforming to British Standard 3621. You should also install
a NACOSS approved burglar alarm which will help to reduce your premium.
- Payment:
Consider paying your premium annually rather than monthly as some insurers
charge high APR on monthly instalments.
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