Crime is rising, so it's vital to have cover. But don't pay too much

Ten ways to cut cost of home insurance

PREDICTIONS of a steep increase in drug-related crime make depressing reading for homeowners – there are already more than 1.25m burglaries a year. Although insurance cannot cure the problem, it can at least help to repair the material damage. 

But there is no point paying more than absolutely necessary. You can buy household insurance – which  includes buildings and contents – direct from the insurer, at a supermarket, bank or building society, or through an independent broker. Cover can be arranged by post, telephone or on the internet. 

According to the AA, both buildings and contents premiums edged up about 1% over the last quarter, so before you renew your policy, compare prices with rival companies. 

1 - Beware mortgage lenders 

Lenders often make household insurance a condition of a special deal on a mortgage. But if you buy your policy through your lender, you may pay over the odds. 

Banks and building societies are paid hefty commission by insurance companies, which bumps up the price by as much as 40%. Some institutions even charge a £25 administration fee to anybody who wants to move to another company. But you can often save more than the charge by switching to a cheaper insurer, a saving that is repeated each year. 

2 - Buy two policies at once 

Your insurer may offer a discount if you buy both buildings and contents insurance. But the combined premium will not necessarily be lower than if you bought separate cover from different companies. 

Some contracts enable you to insure your cars under the same policy as your house and its contents. Again, it is important to compare prices, but you may be attracted by the fact that you will only have one set of documents, one renewal date and one payment to arrange. 

3 - Insure the right amount 

If you do not have enough cover, you may not be able to claim for everything you lose or the full cost of repairing damage. If you have too much, you are carrying unnecessarily high premiums. The property should not be insured for its selling price but for what it would cost to rebuild - usually a much higher figure. For contents, draw up a list of all belongings and their current value. Some insurers provide a grid to help you complete the task room by room. If you own any pieces of fine art or antiques, obtain a professional valuation regularly. 

4 - Monthly deals cost more 

Paying in monthly instalments can make a hefty insurance premium easier to swallow. But watch out for companies that add up to 6% to the cost if the premium is paid monthly. You should look out for a better deal at renewal. 

5 - Is your home secure? 

Some insurers offer a discount if you have locks of a certain standard fitted to doors and windows. Others insist that they are fitted - and used. Your policy may be endorsed to disallow any insurance claim if a burglar got in through an unlocked entrance. 

If you have valuables, a safe may be required. Again, the policy may be endorsed so that jewellery will be covered only when worn or in a safe. Some wealthy householders fit two safes - a decoy containing a modest amount of cash and jewellery and a main safe for the more important items. Fitting an alarm may secure a discount. Make sure the installer is approved by your insurance company. Being a member of a Neighbourhood Watch may also trim your contents premiums.

6 - Maintain the property 

There is not much you can do about extreme weather conditions, but keeping the property in good repair will reduce the likelihood of routine problems. Drains and guttering should be cleared regularly. During winter, heat the house round-the-clock and lag pipes to prevent them freezing. 

Many subsidence problems are caused by tree roots, so consider how the problem might be prevented. Most insurers give advice on how to look after your property to reduce the likelihood of a claim. If you live in an unusual property, such as a thatched cottage or listed building, you will need a special policy. 

7 - Insure for longer 

Cover is normally arranged for 12 months, with the premiums reviewed at renewal. But policies are being developed that last three or even five years. The premium is guaranteed throughout, as long as there is no change in the sum insured, protecting you from premium inflation. 

8 - Make no claims 

Ask about a no-claims bonus on your household cover. If you do not claim for several years, you may be able to earn a discount of up to 30%. While not as much as the 60% you can get on car insurance, it is worth having nonetheless. 

9 - Club together 

Check with your employer or any organisation to which you belong to see whether it offers cheap insurance. Firms often sell policies through affinity groups such as trade unions. 

10 - Pay more towards a claim 

All policies require you to contribute towards the cost of any claim you make. The excess, also known as the deductible, is levied to deter small claims and keep premiums down. If you live in an area [that is] prone to subsidence, you may have an excess of £1,000 or more. It is possible to increase your excess. The higher the sum you volunteer to pay towards a claim, the bigger the reduction in your premium. 

Source: Sunday Times 22 August 99