I was left £8,000 out of pocket because of insurance small print mistake – how to avoid happening to you
HOME insurance costs have jumped by 26 per cent over the past year – the steepest rise for almost a decade.
The average price for building and contents cover is up from £169 last year to £212 now and could be set to climb further, according to analyst Consumer Intelligence, which has been tracking the figures since 2014.
Under pressure from soaring living costs, millions cancelled or cut back on insurance policies such as home cover in the year to May, separate research from the financial watchdog found — even before the latest cost rise.
Before winter sets in and the risk of flood and storm damage increases, Harriet Cooke looks at how to keep the price of cover down without leaving yourself exposed . . .
WHAT TYPE OF COVER DO YOU NEED?
THERE are two main types of home cover — buildings and contents insurance.
Buildings insurance is for the structure of your home itself and contents protects all the belongings within.
If you own your own home with a mortgage, buildings insurance is normally compulsory to cover the cost of repairing the property if it’s damaged by a fire or storm.
Ceri McMillan, home insurance expert at price comparison site Go Compare, says: “The cover is vital to protect your home should the worst happen.
“It also covers the interior of your home, such as your kitchen, bathroom and carpets, if they are ruined by a leak, for example.
“And it should pay for accommodation while work is done if your home is left uninhabitable.”
For renters and those in social housing, it is the owner who must make sure the property is covered.
But Ceri adds: “Contents insurance is important for all as it pays out if your furniture, gadgets, jewellery, clothes or other belongings are damaged or stolen.”
Research by Go Compare shows contents cover on its own costs an average of £59 to cover £30,000 of possessions.
Yet a quarter of households don’t have it.
For home owners, combined buildings and contents policies often work out cheaper than buying both separately.
VALUING YOUR HOME FOR INSURANCE
HOME owners buying buildings insurance need to provide a rebuild value for their property.
Set the cost too low and your insurer could refuse to pay out the full amount needed in the event that your home is seriously damaged or destroyed.
Kevin Pratt, an insurance expert at money website Forbes Advisor, says: “You need to insure for the cost of rebuilding your home from scratch if it were completely destroyed — which might be more or less than its market value.”
The average cost to rebuild a three-bed semi is now around £296,000, according to the personal finance site nimblefins.co.uk.
You can use a free online tool like the one on the Association of British Insurers website (abi.org.uk) to help get the estimate right.
CHECK WHAT’S EXCLUDED FROM YOUR COVER
WITH contents cover, tools in your garden shed and outdoor furniture may not be covered, so check your policy carefully.
Watch out for any cap on what can be paid out for any single item, especially if you’ve got any expensive tech or jewellery.
Think about whether you need cover for gadgets and other items you take outside the home — it’s normally cheaper to add these to your contents insurance rather than buying a separate policy.
Bikes don’t tend to be covered within cheaper contents policies, but you can also add them.
Accidental damage is the most common type of claim, but you normally pay extra for this, too.
With buildings insurance, you could be denied a payout if your insurer claims that damage to your home or other belongings is down to wear and tear or failing to maintain it properly.
James Dixon, 32, was left almost £8,000 out of pocket three years ago when a storm blew part of the roof off his house near Worcester, turning his lounge into “a lagoon”.
The personal trainer, who writes for sport website fitnessbrain.co.uk, says: “I had very basic insurance which cost me less than £60 a year, but I hadn’t looked at the small print.”
James says his claim wasn’t fully paid because the wind speed wasn’t considered fast enough.
Insurers can use loopholes like this to claim that roof damage is down to a lack of maintenance.
James adds: “The insurer paid out just a few hundred pounds.
“Now I’ve got a much better policy for just under £200 per year.”
How to trim costs
- DON’T let your policy renew automatically without checking on sites such as gocompare.com or Uswitch to find a better deal.
- ONCE you’ve found a good deal, see if you can get the same price through Quidco or Topcashback – which can pay £35 or more cashback.
- PAY upfront for cover if you can, as insurers charge up to 40 per cent more if you pay monthly.
- IF you’ve not made a claim in the last year, you can get a no-claims discount of up to ten per cent, even if you switch insurers.
- HAVING a BS3621 standard five-lever mortice deadlock can cut your premium costs, as can installing an insurer-approved burglar alarm.
METERS LEAVE USERS SMARTING
MILLIONS of households with smart meters could be left unable to track their energy use or bills properly if they switch supplier this winter.
Government figures show that nearly three million out of the 31 million smart meters installed in UK homes have already gone into “dumb” mode – meaning customers can’t use the plug-in display to keep tabs on costs.
Users also have to resubmit readings to their supplier instead of these being sent wirelessly by the device.
Millions of others have the first generation of smart meters and could face the same problem if they move suppliers.
Experts warn that it’s making life even tougher for struggling households who rely on the gadgets to monitor spending and keep costs down.
Consumer expert Martyn James said: “Energy customers were pushed to move to smart meters on the promise that it would help them stay in control of bills.
“It’s unfair that millions can’t do this at a time when costs are soaring.
“When we head into winter many will be rationing their heating and terrified to go over budget, so these meters should be fixed as a priority.”
Suppliers have a target to ensure all smart meters work with any provider by the end of the year, with some being fixed with a software upgrade.
Matt Copeland, head of policy at campaign group National Energy Action, said: “Regulator Ofgem must take enforcement action if the target is missed.”
Many of those whose meters have stopped working properly didn’t even choose to change supplier – they were switched when their previous provider was taken over.
That’s what happened to Lesley James when SSE Energy Services customers were moved to Ovo in April.
The 70-year-old from Teignmouth, Devon, who has a prepay smart meter, was assured the transition would be seamless.
But when she went to check how much gas and electricity she had used, the screen said: “Lost network”.
It left her unable to track her use or how much money was left on her meter for the following six months, despite many calls and letters to Ovo asking for help.
She said: “I’ve been worried as I had no idea when I needed to top up – I’ve never owed money for gas or electricity before.”
Ovo sent her a new functioning monitor as well as flowers when Sun Money stepped in.
If you notice your display screen suddenly goes blank or your readings don’t seem correct, contact your energy supplier as soon as possible.
In most cases they should send you a free replacement display, but they can charge up to £50, for example if the gadget is more than a year old.
Government-backed campaign group Smart Energy GB said that 92 per cent of smart meters are operating properly and the latest polls found nine out of ten smart meter users are happy with them.