Last updated: 22/10/2020 | Estimated Reading Time: 6 minutes
How to reduce the cost of your home insurance
Britons spend an average of £128 a year on contents insurance and £158 a year on buildings insurance - or £279 on a combined home insurance policy offering both, according to data from the Association of British Insurers (ABI).
When you do the maths, £5 a week is little to pay for the peace of mind offered by home insurance. But if you’ve let your old policy automatically roll over each year, you may be paying over the odds. Here’s how to find a cheap home insurance policy the next time yours is up for renewal.
In This Guide:
- Increase your excess
- Don’t overinsure
- Increase security at home
- Protect your home against disaster
- Compare home insurance
Increase your excess
All home insurance policies, building and contents, will come with a compulsory excess - the amount you’re personally expected to pay toward any repairs or replacements as part of any claim. You can lower your premiums by negotiating a higher voluntary excess on top of this compulsory excess. But don’t make so your excess so high that it’s beyond what you’d be able to afford.
Your premiums will directly correlate to the total sum insured under your policy - the amount you’d be compensated for the total destruction or loss or your home and/or its contents. You can keep your insurance premiums to a minimum by only obtaining the exact level of cover you need for building and possessions.
It might be tempting to simply guess the total value of your property’s contents, or to err on the side of caution by opting for a very generous sum insured. A contents insurance calculator can guide you as you take inventory of your home and total up the value of its contents, helping you arrive at a close estimate and save money.
The sum insured on your buildings insurance policy should be equivalent to the total cost of rebuilding your home in the event of its total destruction. But Few people beyond architects, builders, and surveyors will have any idea what this figure is - hint: it’s not the price you paid for the property, or its current value. The insurance industry offers two shortcuts for estimating the sum. Bedroom-rated policies ballpark the cost of rebuilding your home based on the number of bedrooms it has, while blanket cover policies offer you a very high or even unlimited amount of cover.
These will be both be overestimates and you’ll end up paying higher premiums than you need. You can save money by opting for a sum-insured policy, offering cover only for the exact cost of rebuilding. Use a chartered surveyor to help you arrive an accurate figure. An index-linked policy will factor in increases in the cost of rebuilding - including material and labour -over the term of the policy.
Increase security at home
When you’re looking for home insurance, insurers will ask you questions about the property to determine how risky they believe it will be to insure. If you can demonstrate you’ve taken adequate security measures and reduced your risk of burglary and vandalism, your premiums will fall. In fact, without taking some of these precautions, you may struggle to get a policy at all.
- Fit Secure Locks: doors and windows should be fitted with insurance industry-approved locks. Without them, you’ll struggle to obtain cover for your contents at a reasonable price.
- Install a Burglar Alarm: many insurers will offer discounts on your premiums if you have burglar alarm installed.
- Install a Safe: if you’re insuring high value items like jewellery and other valuables, you can reduce the cost of your premiums by storing them in a safe.
- Join the Neighbourhood Watch: not only will your neighbours be on the lookout for unusual activity around your property, some insurers offer discounts for membership.
- Limit the Amount of Time Your Home is Unoccupied: unoccupied homes are more likely to be targeted by criminals, or suffer extensive damage in fires, natural disasters or in the event of accidents like a burst pipe. In fact, if your home is unoccupied for long period of time - typically more than 30 or 60 consecutive days - your home insurance policy will be invalidated, and claims rejected. But even within the terms of your current policy, if you’re frequently away, your premiums will rise.
Protect your home against disaster
Similarly, if you take measures to protect your home and its contents against destruction in a natural disasters and accidents, your insurer will see you as lower risk and reward you with lower premiums.
- Install Smoke Alarms: this will be a condition of many home insurance policies, and a necessary precaution for everyone.
- Insulate Pipes: according to the ABI, nearly one in five claims on made on buildings and contents insurance policies are for leaks. In the winter, pipes can freeze and then burst when they thaw, causing substantial damage. During some cold snaps, more than 3,500 claims for burst pipes are recorded each day at an average cost of £7,000. Protect your home and reassure your insurer by insulating pipes.
- Protect Your Home Against Flooding: if you live in a flood risk area, it can be expensive and difficult to get home insurance. Obtaining flood protection systems, like barriers, will increase your likelihood of finding cheaper home insurance.
- Remove Tall Trees: most insurance policies will cover you for damage caused by trees and branches falling on your home and by subsidence and heave caused by tree roots. Some insurers will query you about the height of trees surrounding your property and their distance from your home as part of the underwriting process. If you have a tall (over 10m) and ageing tree very close to your home, you may reduce risk, and home insurance costs, by removing it. Avoid planting new trees within 6m of your home.
- Maintain Your Property: carefully maintaining your property and addressing issues before they escalate will not only reduce your insurance expenditure, it’s often a condition of policies. Insurers can reject claims if they believe you haven’t been adequately maintaining the property.
Compare home insurance
There’s substantial variation in the type, level of cover and price of home insurance policies on the market. To ensure you find the best deal, with the exact coverage you need and for the cheapest price, you’ll want to compare home insurance quotes from as many insurers as possible.
Money Expert is a price comparison site, allowing you to gather quotes for home insurance from dozens of insurers in moments.
Once you have a home insurance policy, don’t allow it to automatically renew - rates will often be higher if you stick with the same provider. You can find substantial savings by running a fresh home insurance comparison each year.