About Property Insurance
There are two types of household insurance policies.
Both policies cover you against a stated list of perils for example; fire, subsidence, theft, flood and storm, as well as providing important cover for your legal liabilities as a homeowner and occupier.
Buildings insurance is the only insurance plan that a mortgage lender insists you put in place as a condition of the mortgage. If you do not take out your own plan, the lender will put in place a plan from their own provider which you will have to pay for and in many cases this not as competitive.
If you are purchasing a flat, often this cover will be built into the service charge that you pay to the freeholder, your solicitor will check this for you.
At Reliance Mortgages Ltd, we have access to a range of competitive providers and can quote cover for your own home, as well Landlords Insurance.
Specialist landlord policies have built in additional protection for landlords and if your property is mortgaged, the lender will insist that you have a plan that is designed to cover let property.
Having a portfolio of property can create administrative complications when each property is insured separately. Reliance Mortgages Ltd can offer block property cover, which means that you have just one policy with one annual renewal and payment. With a block policy, you can add and take away properties at any time throughout the year as you buy and sell, with just a simple phone call.
Do I need to buy both buildings and contents from the same company? – You do not have to insure your contents and buildings with the same insurance company. The household insurance market is very competitive and it is always worthwhile shopping around. However, using the same company may help to streamline claims handling if you suffer damage to the building and its contents. Read the policy – An insurance policy is a contract that sets out legal obligations on both the policyholder and the insurer so it is important you understand what you are agreeing to. Modern insurance policies are easy to read – many of them have won Plain English awards. There is no “small print” and you should read the policy you are considering NOW so you understand the level of cover it will provide and the circumstances in which a claim can be made. If you need any points clarifying, speak with your insurance company or insurance adviser on the particular matters.
Exclusions and excesses – These explain what your policy does not cover. You should read your policy to be sure you are clear about the cover it provides. If there is anything you do not understand, ask for an explanation from the provider of the cover either a broker or the direct insurer. In the event you make a claim you may be required to pay the first part yourself – this is called an excess. Excesses are applied to a range of claims. Check these when you buy your policy and at each renewal date.
Extensions of Cover – The risks for which you are covered are listed in your policy. However, for an additional premium, you can widen your policy to cover “accidental damage”. Under a conventional contents policy (“indemnity” or “new for old”) your carpet, for example, would be insured if it were burned, damaged by leaking water or ruined by malicious vandals. It would not be covered if you spilt a tin of paint on it. This is known as accidental damage and can be a valuable extra protection.
“All Risks” is cover for items which you regularly take out of the house such as binoculars, cameras etc. These can be listed in the policy under an “All Risks” section, again an extra premium is payable.
Paying your premium – Many insurers will allow you to pay in installments. You must keep up the payments or cover will stop. You need to be clear on the requirements of the policy you are considering before you sign up.
No-claim discounts – Some insurers operate a no-claim discount system when policies are renewed with them. Check on your renewal notice to see if this applies. Security – Some insurers require the installation of approved alarms and/or minimum-security fittings before providing cover. Check whether this applies.
If you have suffered from theft, malicious damage or vandalism, tell the police immediately.
If you have lost credit cards or cheque cards, tell the company that issued them immediately, a delay of even a few hours could prove expensive for you.
All insurance policies set out clearly the risks they do and do not cover. Read your policy and make sure that the loss you have suffered is covered by your policy. Decide which policy – buildings, contents or both – to claim under. If you are not sure, telephone your insurer(s) for advice. Many insurance companies provide telephone helplines for policyholders facing an emergency. They can give you the names of good tradesmen for emergency repairs and, of course, give detailed advice to those having to make a claim. Your policy booklet gives you a contact number.
Complete the form as soon as possible and return it with, where available, estimates for the cost of repair or replacement of the damaged property. If you have a replacement as new/new for old policy you can claim for the full cost of repairing your property or replacing it with new items if they´ve been stolen or destroyed. If you have an indemnity policy then you must deduct an amount to represent wear and tear on the claim form.
It may be difficult to get estimates quickly (for example, if damage is widespread in your area as a result of flooding, builders and plumbers may be hard to track down), send the claim form to the insurance company straight away and tell them you will send estimates as quickly as possible.
If temporary repairs are required to prevent further damage, arrange for the work to be done and keep bills. The cost may form part of your overall claim. It is important to keep damaged items because the insurance company may want to see them. Burnt or soaked property can be kept in a shed or garage.
Insurance companies usually want to see evidence of ownership and value of property which has been lost or damaged. It is important to keep, if possible, receipts and professional valuations. If you do not have these ask the insurance company what other evidence they will accept.
How are premiums calculated? When setting premiums, most insurers will start with the postcode of the property to be insured. Postcodes enable insurers to identify a geographical area, thereby allowing premiums to better reflect their claims experience in that locality. However, postcodes have two major disadvantages – first, the insurance industry has no control or influence over the Royal Mail’s allocation of postcodes and second, an individual postcode may contain within its boundary, areas of higher or lower risk than the average. This information is generally not known to individual companies or the industry as a whole.
The postcode is the base upon which insurers calculate premiums. A number of other factors are taken into account when calculating the full premium such as a policyholder’s previous claims history, the sum(s) insured and the nature of the items to be insured. Not all insurers place particular postcodes in the same rating bands. Competition between insurers means premiums can vary considerably for similar risks in the same locality. It is worthwhile shopping around.
Householders, like everyone else, have a duty to exercise reasonable care in everything they do. If you are careless or negligent, and this results in injury or damage to someone else or their property, then you could be held legally liable for this and have to pay compensation. Contents and buildings policies cover you against this risk. The buildings policy covers you as owner of your home while the contents policy covers you as its occupier.