For many of us, the prospect of renewing the annual building and contents insurance policy is something done without particular engagement or interest in the process. But what exactly is this insurance and why do you need it? Equally, how can you save money on your policy in an ever more expensive world?
What Does Buildings and Contents Insurance Cover?
Although the two policies are frequently bought together, they actually cover different things. Buildings insurance is compulsory if you have a mortgage and it covers damage to the house itself. This can be anything from a bungled DIY accident through to flooding, fire or other serious damage. More than one person has seen their house burn to the ground in a fire and then realised that they have let their policy lapse, so make sure you never find yourself in that position.
Buildings insurance should cover the full rebuild cost of the house and you can usually find this figure on your valuation report – it includes the cost of the land too, as well as architectural and building work. You can speak to a surveyor if you aren’t sure. There are add-ons for the buildings insurance element, such as accidental damage, which covers any accidents at home without needing to pay huge excess costs. These can be handy additions, particularly if you have a family.
Contents insurance covers the items within your home and this isn’t a compulsory insurance. You will agree to pay a certain excess and things in your home will be covered up to an agreed amount against damage or theft.
There are a lot of terms and conditions associated with both these insurance policies, so make sure you read the small print and understand any provisions. And of course with all insurance, it’s vital to be 100% accurate and truthful when completing your application, or it will be nullified and you could find yourself in trouble with the law for fraud.
How Can you Save Money?
There are ways to cut down on the cost of buildings and contents insurance. Firstly, you must never skimp on cover to reduce the cost of your policy, as it’s counter-productive if you ever have to make a claim, particularly with buildings insurance. With contents insurance, if you are finding your premiums extremely high to cover high-value items, then it does raise the question of whether you really need them.
There is great variation among providers, so do shop around and compare building and contents insurance at MoneySupermarket.com. You simply enter your personal details and requirements and a list of the cheapest providers is returned for you. You can then tweak your policy accordingly. To make it cheaper, look at the effect of increasing your excess – but consider whether you’d be willing and able to pay the excess in an emergency.
Also look at the add-ons and consider whether they are necessary. If the policy offers legal services for a good price, this can be very valuable as the cover limit tends to be very generous. Avoid taking out ‘double cover’ on things such as accidental damage or home recovery services, as you may have these from other policies or even bank-account packages.
Pay your premium as a single annual fee rather than monthly and you’ll save more money. The monthly payments are essentially a loan and you’ll pay interest for the privilege. It’s better to pay upfront or spread the cost with a zero-percent credit card.
You can also save a little extra by heading to your price comparison site via a cashback website, which offers you a fixed sum or percentage of the policy cost simply for clicking through to your provider of choice. This can be a great service, but just make sure you pick the insurance policy on the basis of its cover, rather than for the lure of any incentive.
Haggling can also save you money. Don’t be afraid to pick up the phone and ask for a cheaper premium and always ignore the renewal figure that your insurer sends through at year end. It will generally be inflated and it’s always worth negotiating. They want your business, after all.
Also look for loyalty schemes or cheaper premiums offered by companies that you already have other services with. See if you can get extra discounts or offers through your employer or any trade or professional bodies you are a member of. It’s surprising what’s available when you start doing your research!