Home Insurance

Insurance premiums, the name for payments made to insurance companies, depend on the insurer, the level of cover and how risky you're perceived to be. So start by defining your cover and ensuring you're as low a risk as possible.

Full information on this, including the difference between buildings and contents cover and how to lower the risk category you're in, are in the additional Cheap Home Insurance Tricks guide.

Plus, if you've not got 'normal' circumstances - say, you've made a claim in the past few years, are in an area prone to flooding or subsidence, have taken in lodgers or are in a flat share - make sure you tell the insurer. If you don't and then try to claim, even for an unrelated issue, your whole policy may be invalid. With insurance, the golden rule is: tell them the whole truth, and nothing but the truth.

Beware monthly payment plans

Beware 'pay monthly' options - usually the insurer just loans you the annual cost and then charges interest on top at hideous rates. So either pay for it in full, or if you can't afford it, use a credit card with a lower APR (or better, a 0% credit card for spending, ensuring your repayments are big enough to clear it within a year).

Some insurers currently have promotions where you can pay monthly at no extra charge. See the Special Deals section to find out which ones.

Don't over-cover on buildings insurance

For buildings, don't over-insure - a common mistake is to cover the house's market value (the amount it might sell for), meaning many people end up over-insured and paying more than they need to.

You should instead be covering (the "sum insured") the rebuild value, which is simply the cost of rebuilding the property if it were knocked down.

So the real key isn't location, but cost of materials, labour and architects. However it's important any building policy covers the cost of somewhere for you to stay while your home's rebuilt.

To find a rebuild value, commissioning a survey is most reliable, but is expensive unless you're getting one anyway (eg, if you're buying a new home). A less accurate, but quicker option is theAssociation of British Insurers' calculator.

Some comparison sites use the ABI's data, such as MoneySupermarket*. Or you can also ask your insurer to give you a rough value based on standard assumptions, but this will be the least accurate.

Don't under-cover on contents

For contents, don't under-insure - this could lead to insurers not paying out when you need it. Add up everything, including smaller items like clothes, on a 'new-for-old' basis.

If you insure £20,000 of possessions when you actually have £40,000-worth and have to make a claim, you'll at best only have 50% of contents protected or, worse still, the policy cancelled for being underinsured. If the latter, you must disclose it in the future, hiking the cost of insurance.

Know your locks to lower your premium

Don't know your five-lever mortice deadlock from your rim automatic deadlatch? Well you should do, as getting the right lock on your doors could slash money from your home insurance premium.

Insurers often ask what type of lock you have so you risk invalidating your cover if you put down the wrong option. The descriptions and pictures below should help you tell what you have.

THESE ARE THE MAIN LOCKS TO WATCH OUT FOR:

The following are roughly in order (apart from options 3 and 4 which are much of a muchness) of what is considered most secure and which will therefore lower your costs, but there is no hard and fast rule.

• Five-lever mortice deadlock conforming to BS (British Standard) 3621. This is the gold standard of locks the police recommend and insurers often like to see on your policy. So if you're thinking of changing your locks, this is the one to go for. The British Standard kitemark is stamped on the metal plate so it's easy to see, it's heartshaped with an 's' in the middle.
• Five-lever mortice deadlock. This is the same as above but without a British Standard kitemark.
• Key-operated multi-point locking system. A multi-point locking system has a minimum of three locking points that all lock simultaneously by the turn of a key. Multi-point locks are most common on uPVC doors or patio doors.
• Rim automatic deadlatch with key-locking handle. These offer security at night, allowing you to lock your door more securely from the inside.
• Any other lock? If you don't have any of the above locks then you probably have what's classed as "other lock type" by insurers. To cut costs and improve security, they recommend you consider getting one of the recognised locks above (unless you've got a defined specialist lock, in which case you might need a specialist insurer). The one pictured right, for example, although of decent quality, does not meet insurance standards when fitted alone on a door and has no external deadlocking feature allowing for the latch to be bypassed and opened easily with force.

Which lock is best?

If you have one of the top four locks above (ie, not an 'other lock') you should have decent security and lower premiums.

Sometimes, insurers will distinguish between the quartet. Where they do, the five-lever mortice deadlock conforming to BS (British Standard) 3621 is normally the best, followed by the same lock but without the kitemark.

As approaches vary among insurers, however, it’s a good idea to compare quotes from as many providers as possible.

What lock you can have fitted may also depend on how sturdy your door frame is, as a quality lock is only as strong as the doors and frames to which they are attached, so you'll need to take that into consideration.

Can changing your locks cut costs?

The better your lock, the more secure your home is, and the less you pay for your insurance.

We ran some quotes on a price comparison website and the difference in premium between having a five-lever mortice deadlock (preferred by insurers) and a rim automatic deadlatch with key-locking handle with the same insurer, was £48 for the year.

With a five-lever mortice deadlock coming in at about £30 to buy, it's a no brainer that it’s cheaper to change the locks and get a lower premium with the added comfort of extra security for your home for years to come.

Insurers recommend that the lock is professionally fitted, the cost of which may be similar or higher that the lock itself. But don't let that put you off, as even if it means the lock doesn't pay for itself in year one, it's an investment so it will do in the future.

You can’t just say you have the lock though to get a cheaper premium. If you say you have certain types of locks and you're burgled, and it turns out these locks don't work, your insurer may not pay out.

Ensure your contents are covered when left outside

If you have a garden, always check policies to make sure possessions left in it are covered. Plants, trampolines, BBQs, bicycles, lawnmowers and more are usually covered as standard when kept within the "boundary of the garden". If you leave items outside this, upgrading to 'all risks' cover for £20-£30 should ensure you're protected.

This extension should also cover your belongings when on holiday to accompany your travel insurance - but do check the limits are enough.

Make sure the 'contents in the open' cover limit is high enough to pay for these items. It's often £1,000 max, but varies between insurers.

Increase your excess

Home insurance policies come with a compulsory excess (the amount you have to pay towards any claim). For example, if you have an excess of £100, but make a claim for stolen goods worth £400, your insurer will give you £300.

But you can also choose to pay a voluntary excess on top, which will bring the cost of your premium down. The more you pay the lower your premium will be.

You need to be realistic though. Make sure the total excess is affordable in case you do have to make a claim.

Unemployed? You're very likely to pay more

If you're unemployed you face the double whammy of no work and what can be a five-fold jump in insurance costs by declaring you are unemployed. The same hikes don't apply to homemakers (housewives/househusbands). If that's you, say so. Don't state you're unemployed as this could wrongly hike your premium high.

However only enter "homemaker" if you're genuinely not seeking work (or receiving benefits which require you to), otherwise it's fraud. Read the full MSE News story: Unemployed walloped with high insurance.

Do you know the Consumer Insurance Act?

On 6 April 2013, the Consumer Insurance Disclosure Act (see our news story) came into force. It means insurers must ask the questions they want answers to when accepting business, instead of consumers having to volunteer the information they think may be relevant.

With this in mind, if a claim's rejected and you feel you haven't been "treated fairly" (this is a key phrase, quote it in correspondence), make a formal complaint. If that fails, you've a right to an independent decision from the free Financial Ombudsman. Full how-to in How To Make A Financial Complaint.

Flooding? What you should do

With the ever-increasing risk of flooding, we can all do our little bit to reduce the risk. What if you become an unfortunate victim of flooding? Do you know what to do, where to start or who to contact?

We've some top tips to help you claiming on insurance, and even how to minimise the risk. Read the full MSE News story: Flooding victim? Top tips for claiming on insurance.