Selecting the best deal from the huge range of policies on offer can be a nightmare. You will need to pick your way through this insurance jungle very carefully indeed.
Many home buildings insurance companies offer all-singing, all-dancing policies. However, don’t be fooled by the sales jargon. Many of these policies will have a greater number of conditions, caveats and exclusions. Remember, the home buildings insurer will do all in his power to avoid paying out on premiums.
The cost of your home buildings insurance policy will be calculated based on the cost of replacing your property along with any additional items that might be included.
Higher premiums can be expected where the risk to damage, from whatever source, is deemed to be greater.
The policy itself will outline what the insurer will pay out for in the case of specific events. You will need to check this very carefully before you sign up for a policy. Most insurers will not pay out for events such as earthquakes, explosions or other ‘acts of god’. If an insurer does cover any or all of these events, it is likely to come a price.
Amount of Cover
The 'sum insured' is the amount of money for which your home is covered and is the maximum an insurer will pay out even if your home is burnt to the ground. It is also the amount it would cost to rebuild your home although that's not the same as your home's market value, which could be greater or less. It is essential that you know just how much this sum needs to be to cover this. If in doubt, seek professional advice.
Some insurance companies offer unlimited cover. This means you don't have to worry about how much cover you need or whether it is adequate. Other insurers offer premiums based on a simple assessment of where you live and the type, age and size of your property.
Most insurers allow premiums to be paid monthly or annually. If you decide to take a monthly option, you will need to check whether the insurer charges extra for spreading the payments. You will also need to be aware that if you move house you may need to change both your buildings insurance policy and your contents insurance policy because the risk has changed. Nearly all insurers will impose exclusion and excesses clauses.
The most common exclusions are storm damage to gates or fences, frost damage and structural damage caused by sonic bangs from aircraft. Find out what these exclusions are before selecting your policy so that you do not have any nasty surprises.
Buildings insurance does not cover wear and tear so if your property is not in a good state of repair a claim may not be paid in full. Your insurer may apply restrictions if your home is not lived in for more than 30 days. Most insurers will insist that you meet the first part of any claim. This is caused the ‘excess’ part of the policy. The level of excess depends on which section of the policy you are claiming.
You will need to keep your policy up-to-date.
Once you've bought a satisfactory policy it's essential that your cover remains up to date and adequate. Most insurers automatically ‘index-link’ your sum insured to take into account changes in rebuilding costs – but double-check that yours does. Don’t forget that your premiums will be indexed linked as well. You will need to let your home building insurer know if you improve your property, for example by installing central heating or building an extension. The sum insured will probably need to be adjusted upwards. Also shop around for alternative quotes when your policy is due for renewal. You could find a better deal elsewhere. You are always advised to seek advice from an independent insurance broker before making any commitment to an insurance policy of any kind.
Remember, not all brokers are independent.
Many will be associated to specific insurance or banking institutions and will only give you advice based around their own product range.
