Bonfire night is not only a busy one for the fire brigades but one of the most likely for accidents to happen at home. Far too many do not insure their property correctly and do not realise the expensive risks they take.
The basic difference between buildings and contents insurance is that the former covers the structure with its fixtures and fittings. Contents refers to portable items that are likely to be taken in a move.
A property should be insured for its rebuilding costs, not for its sale value which includes the land. Hiscox recommend homes are surveyed every five years and in between uprated in line with the Royal Institution of Chartered Surveyors’ rebuildings index.
There is a calculator provided by the Building Cost Information Services via the Association of British Insurers’ website. It is a guide and not suitable for non-standard properties.
Insurers broadly take three approaches: up to an arbitrary figure (usually £500,000) or based on the number of bedrooms or a homeowner’s own figure (which may come from a qualified surveyor). Beware of using online tools to calculate building costs as “they only provide a general indication”, says MoreTh>n, part of Royal & Sun Alliance.
Remember to include for any greenhouse and outbuildings. They could be damaged by falling trees or storms. Mike Shaw, of Ellis Bates Insurance Brokers, reminds to include swimming pools, ornamental ponds, patios, drives, fences and walls.
Bates also says to consider having accidental damage protection so that if a foot is put through a ceiling, the costs are covered. Usually policies automatically cover for sanitary fittings and fixed glass.
Look for a policy which pays for accommodation should the property have to be vacated.
Ask about the different levels of excess (the first amount of any claim that you will pay) and, if you are prepared to accept a higher excess, the premium could come down appreciably.
If both buildings and contents are insured together, there is likely to be a discount. It can make it easier to claim and also mean one excess applies.
One secret is not to automatically renew with your current insurer without checking on competitors. Even though the present insurance company knows the level of risk and claims record, sadly far too many insurers rely on inertia.
Premiums jumped by 14.3 per cent in the 12 months to the end of September, according to the AA. The average is now £224.95. Comparing a three-bedroom semi in central Leeds with five years no claims discount occupied by a 40-year-old male teacher, moneysupermarket.com found premiums varied from £69.21 (Budget, owned by BGL Group but with £300 excess) to others with £100 excess: £82.68 (Churchill), £92.22 (Prudential), £113.70 (LV=) and £151.54 (MoreTh>an).
Barclays, using Gresham Insurance, give up to £50 refund towards any fees incurred in switching insurer. It says the average discount online is 25 per cent. It offers legal liability up to £2m.
LV=, better known as Liverpool Victoria, gives five per cent premium discount on buildings if a motor policy is already held.
An estimated nine million people have homes either located on a flood plain or at risk of subsidence. They may struggle to gain buildings cover. The prepared quotation models used by call centres will not apply and many are likely to need insurance through a specialist broker.
For some suitable names, contact the British Insurance Brokers’ Association.
If you should be in a non-standard property or location, supply any supporting paperwork to show previous action taken. It may be, for instance, that the roots of a tree or vine have caused problems but that appropriate steps have been taken to remedy the situation.
In seeking a quote where the property is liable to flooding, mention any preventative work undertaken.
If flooding occurs, Direct Line, part of Royal Bank of Scotland, deploys an emergency team to help cope with the damage and to authorise repairs. It suggests placing valuable and electrical items in high cupboards to reduce the impact of any flood damage.
If a home is left unoccupied, the greatest claim is likely to be for burst heating pipes. Therefore, either leave the heating on with a loft hatch open to ensure warm air can circulate or drain the system.
Check if your policy has a home emergency section which means you are entitled to the services of a locally-approved tradesman. This is a double-edged sword. It can be great for the insurer to pre-approve such staff and call them in but it also means you are not at liberty to use your own initiative.
Prompt action can cut a potential bill enormously, such as using a local plumber if a boiler goes wrong. However, if an insurer insists on you first contacting it and only going through its approved tradespeople, it may not pay out if you take other action. If you feel the insurer is being unreasonable, refer the case to the Financial Ombudsman.
One scandal that has not been addressed by the insurance industry is where an enquiry is made about a possible claim but where the householder undertakes the work themselves, the insurer notes the matter on file and treats it as a claim even though it has made no payment. It is high time the Ombudsman called insurers in to stamp out the practice.
Until then, the lesson is not to enquire unless there is a strong intention to make a formal claim.
Insurers expect homeowners to take reasonable precautions. MoreTh>n recommend that homeowners have a qualified surveyor carry out an assessment every two to three years.
Now is the time to carry out an autumn home MOT. Hiscox research shows that 58 per cent of winter weather damage originates in the loft. Freeze damage last winter created more claims than fire, accidental damage or water damage with the age of a property having minimal bearing.
In older homes, look at the condition of the heating system and ensure lagging is good. Newer ones may be over-insulated, keeping out the heat that leads to frozen or burst pipes. If away during the winter, ask someone to check the property regularly and keep the heating on low.
Martyn Foulds, senior claims manager at Lloyds TSB, says check for leaves blocking gutters and for slipped tiles and that chimneys have been swept. He also says not to leave keys in locks or visible and ensure burglar alarms are regularly serviced.
Many homeowners are “leaving a gaping hole in their security when they move home”, says the AA. Three-quarters do not change their locks within a month of moving with half not changing them at all, representing a clear security risk. They say over 107m spare keys are in circulation including with window cleaners, builders and ex-partners.
If moving home, remember to also change the alarm code.