There are worse things in life than death. Have you ever spent an evening with an insurance salesman?
- Woody Allen
The Act of God designation on all insurance policies means, roughly, that you cannot be insured for the accidents that are most likely to happen to you
- Alan Coren
The cost of your home insurance will mainly be determined by the cost of your home and possessions. Insurance customers have crafted a number of ingenious strategies to try to make the most of this (some more successful than others). Need to give the insurance company a quote on the price of your house? Invite a few different property valuers around and go with the most dismal appraisal they give you- perhaps from the naive tyke who barely realises that inflation itself has sent prices up in recent years. Take that low, low estimate back to the insurance company and -Voila!- an affordable policy is yours. Just make sure you are covered for the price of your stuff at the time of accident. Then, if the unthinkable happens and you DO need to claim benefits, you can consult another team of valuers and this time choose the highest estimate.
Most (not all!) insurers are savvy to tricks like this and will send their own trusted valuers around, or cover you for the first price you give them… a high value on your house and stuff will mean a high premium (the fixed payment you make to the insurance company- your bill for their services) AND a reasonable payout in the event of accident. With home insurance, more than any other, you well and truly get what you pay for.
The cheapest option is not to get it at all. But in addition to being potentially pricey, home insurance is hard to avoid. There are a few parties involved (bank, individual, bond issuer) when a house is purchased and it's likely that all of them will want to feel covered for their investment. If you decide not to ensure your new place be prepared for calls from the bond originator (or his or her brokers) and from the bank, telling you that zero insurance is simply not acceptable.
The benefit of arranging your own insurance (rather than going with something organised by your bank, as part of your mortgage) is that you can take advantage of little price variations. The best and quickest way to compare the many policies out there is to use a comparison engine. For the UK market a good option is Confused. I went to the site thinking "how are they going to compare policies for me without knowing my personal information? Insurers take all sorts of details into account- high-risk tenants, dangerous areas, construction materials. A fire station nearby can turn my place into a low-risk home and send premiums plummeting!" Confused.com have thought of all this; they ask you to fill out an online questionnaire before they start comparing. Example Yes/No questions are:
'Your home is not left unoccupied for more than 30 consecutive days.'
"Your home is built of standard materials (ie. brick, stone or concrete walls, and a tiled, slate, concrete or asphalt roof) and has no building work in progress."
'You or any other person living in the home have never been convicted of any criminal convictions, and do not have any criminal prosecutions pending.'
After providing this overview, you're taken to a page of comparisons that draws from 65% of UK home insurers. A good idea would be to try a few different engines (ex. FoundPrice) to get a full picture of the market. Then it's simply a matter of choosing what you can afford, and making sure you're happy with the coverage conditions. Contracts are available at a click, and there's no need to deal with the dreaded salesperson. Happy searching!
