Your
home insurance policy coverage
Regardless of whether you are buying
buildings and contents insurance separately or together, you
should make sure that both elements are sufficient to meet
your needs.
Buildings insurance is the easier of the two
to determine. Basically, this must provide a sum assured
that
is enough to
pay for the rebuilding of your home. If you are buying a
new home and have a survey done, this figure will usually
be indicated
in the survey or valuation. If you are unsure whether this
is accurate, check with the builder. If a lot of time has
passed since you last determined the rebuild cost or you
have made
significant alterations to the property (such as a loft conversion
or an extension), you should ask a reliable builder to estimate
the rebuild cost again.
Almost all contents insurance policies
also put a limit on the overall amount that you can claim,
usually referred to
as the sum assured. For mainstream insurance policies,
this is often set at around the £30,000 mark. Some
insurers are fairly inflexible in that they have a range
of standard
policies with a set sum assured and do not offer many options
to customise the policy any further.
A large percentage
of people severely underinsure their home contents, often
by as much as 50 or even 100 percent.
This
problem is particularly acute with high value properties,
where many high value items are not included on policies
individually,
as they usually should be.
To decide what your minimum
sum assured should be, make an inventory checklist of absolutely
everything you can
think
of that you have in and around your home. Then calculate
how much it would cost to replace each of the items.
This should
include things that you have made or built, been given
or bought, as they would all need to be replaced if
they were
stolen or
damaged.
You should also try to include an approximate
date on which the item was purchased and gather together
any receipts
you may have. Making this list is an incredibly tedious
thing to do, as you will have to slowly go through
every room in
the house, listing every item and then attributing
a replacement value to it. It is worth taking the time
to do this properly
though, as you will probably be surprised at how
high the eventual total is.
Some insurers also put a limit
on the amount you can claim for individual items. You should
look out
for
this in policy
details, where it will usually be called the Single
Item Limit. It may be a lower value than some of
your possessions.
Where
this is the case, you have three options:
- Negotiate
for the full value to be included in the policy.
- Insure
the item entirely separately.
- Break the item down into
component parts of lower value. Cameras can have the
lenses, main body and
peripheral equipment insured separately,
for instance.
There are a few things that your policy
may or may not include cover for:
- Accidental
damage
- Away from home cover (possessions,
cash and credit cards whilst
you are away from your
home)
- Cover for frozen food
Make sure your buildings insurance
policy starts from the day that you sign the contract,
not from when you
move in. If you do not have buildings insurance
and
the house is struck by lightning in between the time you exchange
contracts and move in, it will be you who
is liable.
You should review your buildings and contents
insurance fairly frequently, and make sure
that it is kept up to date with any major
purchases or alterations to your home.
If you fail to inform your insurance
company
of any building
work
you have done or expensive valuables that you buy after you
take out the initial policy, you may struggle
to recoup any money
when
you come
to make
a claim.
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