The Insurance industry in the UK ranks in the top
three largest in the world and in the UK alone the average home owner spends
over £2,000 on house insurance and contents insurance. This article will cover
some of the major issues that people face when taking out insurance and how to
avoid major pitfalls.
For those who aren't aware, House insurance covers
the owners private house for the financial costs against a range of
eventualities (see below) . As a policy, it combines a range of personal
insurance protections, which generally include damage or loss to one's house,
its contents, loss of its use (additional living expenses), or loss of other
personal possessions of the house owner, as well as liability insurance for
accidents that may happen at the house.
A major issue that people fail to take into account
when taking out house insurance is to ensure that the policy covers the full
cost of the rebuild, not just the market value. It is also worth taking into
account that similar houses in different neighborhoods will differ in market
value but actually cost the same in terms of rebuilding costs (this is
obviously dependent on the housing market and should be addressed when taking
out a house insurance policy). Henceforth it is highly advisable for anyone
looking for insurance cover to explicitly ensure that the terms of the policy
cover the entire rebuilding cost and take into account the market value
fluctuations.
The exact cost of house insurance usually is
dependent on what it would cost to replace the house and what extra riders
(extra items or properties to be insured) are attached to the policy. The
policy is a long-term contract, and explicitly lays out in what circumstances
insurance companies will and will not pay out in. Acts of God (Hurricanes,
Land-Slides etc.) or damage caused by acts of War are generally not included in
basic house insurance deals but can be included if there is a significant risk
of these circumstances arising. The levels of this risk obviously affect the
initial price of the policy.
The terms could also provide the home owner with
different accommodation if your house is deemed unsafe to live in after the
damages occur. Despite it being one of the more appealing issues it is
important to make sure that anyone taking out the house insurance policy
doesn't just go for the cheapest price and looks for features that are
specifically tailored for the area you live in. Use price comparison sites to
ascertain what insurer will offer you the best deal.
House insurance policies can include cover in the
event of an injury to a person whilst in your house. In addition to this
certain policies could also provide cover and absolve you of legal liability if
someone were to be injured.
As well as the Outside structure, house insurance can
also include fixtures and fittings in the house including bathroom appliances,
fitted kitchens and large personal furnishings i.e. lighting and fireplaces.
This is usually determined if the fixture can be removed and taken to a new
house.
House insurance policies will usually include outer
structures such as garages, patios and garden sheds but might not cover
boundary walls, fences, gates, paths, drives, hot-tubs and swimming pools.
Check the specific policy at the time of taking it out.
Most mortgage lenders stipulate that the house owner
takes out a house insurance policy as a pre-requisite of the loan to protect
the lender if the house in question was damaged beyond repair. It is also
another condition of a house insurance policy that anybody with significant
interest in the property should be included on the policy. This will only be
waived if the value of the land exceeds the amount of the mortgage balance. In
a case like this even the total destruction of any buildings would not affect
the ability of the lender to be able to foreclose and recover the full amount
of the loan.
A recent study has indicated that shopper confusion
about the precise financial cost of the house insurance policy could be costing
the countries home owners millions of pounds every year, with mortgage lenders
cashing in on uncertainty over house insurance and therefore exploiting the
consumer. The findings of the research indicated that 39% of house owners
purchased their house and/or contents insurance through their mortgage provider
in conjunction with their mortgage at more cost and didn't consult any other
providers, which could have offered a better deal.
House insurance exclusions:
Any policies will be invalid if any of the following
occur
o Falsified
information.
o Lack of
maintenance - negligibility is unlikely to be covered.
o Failure
to install security systems.
o Failure
to carry out repair work on previous claims.
It is also bear in mind that it can sometimes make
more sense to pay for relatively inexpensive repairs yourself than make claims
on your insurance e.g. a cracked window. This will allow you to build up your
no claims bonus.
It is of cardinal significance to check and re-check
specifically what your house insurance policy covers. Every layer of cover
should explicitly include compensation against theft and fire. However, it
could be important to make sure you are protected in the eventuality of weather
damage, frozen pipes, subsidence and more depending on your geographical and
location and the specific threats that you are likely to face. Also, if you
have extended or plan to extend your house make sure your policy reflects the
changes you make as you may need to insure any extra land that is included in
the extension.
There could be discounts available for taking both
house insurance and content policies out with the same insurer and it can
certainly save time. However, just because an insurer is good for House
insurance, it does not mean that they will automatically be
the best for contents insurance and vice-versa. Therefore it is vital to scour
the market, compare and negotiate quotes from a range of insurers for both and
not succumb to the discounts offered as the cheapest is not always the best.
Source: http://articles.org/house-insurance-information-and-money-saving-tips/
