How much are you getting paid to take out home insurance? That’s right, paid. The record so far this year from my cheap home insurance system is £23 profit – and the all-time record is £67 profit. So can you beat it?
Of course not everyone can make a profit, yet the same steps that lead you to that can slice huge amounts off the cost of many people’s insurance, so it’s worth doing anyway.
The most important thing to understand is that there is no one cheapest home insurer. This is all about how each company reacts to your own particular risk. Therefore the only way to find it is to follow a system.
My detailed cost cutting strategy is at www.mse.me/homeinsurance and a month ago someone told me they’d used it to get contents insurance for £3 – so I challenged the rest of my users to see if they could beat it. Ian came back saying he could trump it: “Paid £32 and have £55 cashback confirmed, so I should have £23 profit”.
That’s now my record result in 2016, now the challenge is open to you to beat it. You can read the full detailed system above, or follow these core foundations to slash prices at speed.
Step 1: Know how much cover you need
There are two elements to home insurance: buildings and contents cover. An easy way to work out which each covers is to imagine you can turn your home upside down: everything that stays put is buildings, if it falls, it’s contents. Though if you need both, it’s usually best to get a joint policy, as it stops arguments between insurers over who covers what if there’s a problem.
• Don’t over cover with buildings Insurance. This is only usually needed by freeholders. If you rent or have a leasehold property it’s usually the landlord/freeholder who should have this.
You’re meant to cover the rebuild cost – how much it would cost to rebuild your home should it get knocked down. But many wrongly cover market value, the amount it might sell for – which is often far higher. To find out how much you should cover see the calculator at abi.bcis.co.uk/
• Don’t under cover contents insurance. Most people have far more contents than they think. Walk around the house and add everything up (there’s a calculator on www.directline.com)
• Yet many underinsure thinking: “I’ve £40k of stuff, but’ll only cover £20k as I’d never claim it all.”
However if you do then claim, say for a £1,000 TV, the assessor may say: “you’ve only covered half your stuff, so we’ll only pay you out half.”
It’s also worth considering fitting a secure lock, such as a five-lever mortice deadlock. The insurance saving means it can pay for itself, and cuts costs for years to come.
Step 2: Never auto-renew. Start by combining comparison sites
If you just auto-renew, you’ll often be fined for apathy. Insurers bump up prices just because they can get away with it. And currently prices are rising, so this will be more noticeable.
Comparison sites search a wide range of offers from insurers and brokers. Yet they don’t all search the same deals, or even have the same prices for the same deals. So use two or three.
You may even be surprised that your current insurer turns up top of the list with a new customer quote that’s cheaper than your renewal.
As Vicki emailed me: “My renewal quote was £700-plus. Using comparison sites got it to £188 with a better policy. Thanks.”
Step 3: Then check insurers that comparison sites miss
Comparison sites also tend to miss out special promo deals that insurers offer, so it’s worth checking out if there are any of these as well. There’s a daily updated list of hot home deals at www.mse.me/homeinsurance (which also includes special policies if you’ve high value contents).
Step 4: If you want to stay where you are, haggle
Once you’ve found your cheapest policy take the price to your existing provider and ask them to see if they will match it – they often will.
In a recent poll I did, 78 per cent of customers who haggled with Direct Line said they had success, while 81 per cent did with Admiral and 80 per cent with Hastings Direct. So it’s worth a try.
As Pat Olver tweeted me: “@MartinSlewis Sainsbury’s home insurance renewal £252. Same policy on confused was £186. Rang Sainsbury’s, talked them down to £181.”
Step 5: If you’re moving, once you know what you’re getting, check for cashback
Once you know your cheapest policy and, crucially, you’ve checked it’s right for you, then see if you can earn cashback using a cashback site such as www.Topcashback.co.uk or www.Quidco.com. These sites pay you if you click through them.
This usually works, but there can be tracking issues, so see this as a likely added bonus and always check ensure you’re getting the right policy. If you’ve got time and your top three policies are all much of a muchness, it can be worth seeing the cashback on offer for all three.
And a final word of warning, beware paying monthly, it’s actually just a loan.
In effect, the insurer pays upfront then loans you the cash, sometimes at hideous interest (eg, Endsleigh’s 39.7 per cent APR). If you can’t afford to pay upfront, check the APR.
If it’s high, you’re often better on your credit card, or, better still, get a 0 per cent credit card (just ensure you pay it off within the year). Martin Lewis is the founder and editor in chief of Money Saving Expert. To join the 10 million people who get his Martin’s Money Tips weekly email, go to www.moneysavingexpert.com/latesttip