Introduction | Homeowners
| Buildings insurance |
Contents insurance | Level of cover
| Costs of cover |
Choosing a policy | Making a claim
| Tenants insurance | Landlords
insurance
Choosing a policy
Half of all mortgage borrowers arrange their home insurance through
their mortgage provider - it's so easy, why bother spending time
and effort looking elsewhere, when the chances are you may save
yourself just a few measly pounds?
It may be that the best household insurance policy is the one offered
to you by your mortgage lender. They usually offer you a policy
either separately from your mortgage or incorporated into the cost
of the loan. There are some genuinely good deals on offer from mortgage
providers and many people may prefer not having to budget for this
insurance separately. However, you should be aware of some of the
potential pitfalls…
Some companies capitalise on the fact that many customers are too
lazy or ill informed to change supplier or hunt around for a better
deal. With bank insurance premiums an average of 31 percent higher
than the most competitively priced policies, the cost of this convenience
could be as much as £3,500 over the life of your mortgage.
However, to make matters worse, some lenders go to great lengths
to ensure that borrowers have little choice but to choose the household
insurance policy that is on offer. One in four lenders imposes an
administration fee if a borrower wishes to arrange insurance elsewhere,
while a fifth of lenders refuse to make certain key pieces of information
available to other insurers, preventing them from being able to
offer an accurate quote. Other lenders refuse to allow access to
their best lending rates unless a borrower takes out their insurance.
The reason? Simple - lenders are reckoned to earn around £275
million each year in commission on these policies from insurance
companies. Why not shop around and make sure that you keep just
a little bit of this extortionate sum of money in your own pocket?
Household insurance offered by specialist providers is often cheaper
than that offered by mortgage lenders. Remember that every insurer
specialises in a certain group of customers or type of insurance.
They will all insure most people for most things, but the best-priced
premiums are to be found when your needs fit the bill of the insurers
preferred customer. It can be a good idea to ask them what this
is in their case.
Remember that there can be major differences between policies -
you may not be comparing like with like.
Some policies, usually referred to as indemnity policies, take
into account the usage and wear and tear of your things. This sort
of policy will usually require you to know the approximate date
on which an item was purchased so that the insurers can calculate
a rough value on the date it was stolen or damaged. If you take
this type of policy, be aware that to replace your all your things,
you are either going to need a very successful second-hand shopping
trip, or else stump up quite a considerable amount of cash yourself
in order to buy new.
Many policies offer the more straightforward new-for-old arrangement,
whereby your possessions are replaced with a brand new, up to date
equivalent of the original item. These are generally more expensive
than indemnity policies, but many people find that the extra benefits
are worth it, especially if they ever come to make a claim.
It's all in the small print, so read it! Many people get caught
out by not reading the details and therefore not being aware of
some of the clauses in the contract that mean they are not covered
for quite what they think they are.
|
