June 16, 2011 at 7:44 pm
filed under Home Insurance
Tagged Home Security, insurance
It goes without saying that house insurance is an essential security precaution; but many properties are underinsured. Make sure you choose just the right policy from the many available — and remember to keep updating your insurance cover at regular intervals to allow for rising values and new possessions.
There is now a wide choice of types of household insurance policy; but before you consider any extra benefits available, you should make sure you have the basic cover necessary — against fire, burglary, burst pipes, storm and flood.
Your existing household policy, even if it is a little out of date, will probably cover the most likely hazards such as a small fire, a break-in (causing more damage than actual theft) or an overflowing cistern damaging decorations, carpets and furniture. But would, for example, the policy cover a really serious fire? You should review your policy each year to make sure your house and its contents are insured for their full value.
Obtaining your insurance cover from a local broker is a good idea because he will have a knowledge of local situations and values. A broker is able to negotiate on your behalf with various insurance companies to obtain the best possible quotation. You will not normally have to pay for the services of a broker because he retains a commission from the insurance company.
The premiums charged for insurance will vary from company to company. It is often cheaper to insure in country areas and more expensive in large cities. Some companies offer a no-claims bonus which may take the form of a year’s free insurance after five years without claim.
There are three basic types of household insurance policy available — a building policy which covers the structure of the house, a contents policy which covers the contents of the house but not the structure of the building and a joint building and contents policy which is simply a combination of the other two types. If you buy a house on a mortgage, you will be bound by the agreement to insure the actual house; the policy will probably be held by the building society or other lender. Your personal belongings, which form the contents of the house, will probably require a separate contents policy although the two policies could be combined. Check with the lender.
If you live in rented accommodation, you will not usually be responsible for insuring the structure of the building — only your own contents. In some cases the tenant may be responsible to the landlord for damage to fixtures and fittings, including decorations; you will find a contents only policy will provide a certain amount of cover in this instance. This extension is usually limited to certain risks only and to a total liability of ten percent of the sum insured.
This policy covers loss or damage to the building, including its fixtures and fittings, and damage or loss to garages, outbuildings, gates and fences. The insurance is usually against the following possible causes of loss or damage, but you must read the policy or proposal form to find any restrictions there may be. If in any doubt, you should consult your broker or insurance company.
Some optional extensions now available, which are included in new policies, are:
The basic policy for household contents covers goods and personal effects while they are on the premises; it also gives a certain amount of cover while they are temporarily removed – for example linen and cutlery when they are taken on holiday to a furnished house. The insurance includes the property of the policyholder and any members of the family permanently in residence. A contents policy will include the following types of cover :
Your property should be insured for the amount of money it would cost to replace, if it were totally destroyed. In calculating this figure you should bear in mind that although there is no point in including the value of the land on which the house stands, you would have to pay for the cost of clearing the site and for the architect’s and surveyor’s fees in preparing fresh plans and supervising construction. You would also have to pay the extra cost of rebuilding a single house, which is rather more than the cost of building a similar house as part of an estate. Also take into account whether your house is old, substantial, in a highly concentrated area where land values are exceptionally high or if you have a large land area or an area where buildings could not be replaced in exactly the same way because of local authority requirements. If you are not sure of the amount to insure for, you may need to take advice from a valuer (for which you will have to pay) or from a broker.
To assess the value of the contents, go from room to room and make a list of all you own, putting against each item the present-day purchase price less an amount for wear and tear. Some of your belongings may be brand new and should be put down at their full value; other items such as jewellery and antiques will increase in value. Don’t forget you cannot generally insure against wear and tear. For example, a carpet which would normally last ten years would be insured for its purchase price; if it were completely destroyed by fire five years later, you would only receive an amount corresponding to the value of the carpet at the time it was destroyed. If you received the purchase price, you would be in a better position than you were before. It is in your own interest, therefore, to check on the value of your possessions each year and to reduce or increase the amount of cover according to the value at the time. Under ‘new for old’ policies it is, of course, necessary to insure for the full replacement value and keep the figure up to date; this can generally be done through an index-linked policy.
If any one item of your valuables such as jewellery or furs exceeds five percent of the total insured, you should arrange to increase the limits under the normal policy. Some companies require this if the value of single items exceeds one third of the value of the contents. This is because a normal policy provides cover only for jewellery, furs and certain other valuables up to these limits.
If you have expensive articles – such as furs, jewellery, watches and cameras – which are taken out of the house regularly, you should buy an all risks policy; this may be included as an extension to a household policy or bought separately. An all risks policy will be more expensive than a normal household policy.
Insurance companies are usually prepared to remove the excesses on a policy on payment of a small additional premium. The excess is a figure which you have to pay before the insurer pays the balance.
This section of a building policy normally carries an excess. It does not cover damage to parts of the building undergoing alterations or to gates and fences. The policy also normally includes damage caused by frost, subsidence or landslip – although there is usually a substantial excess. Flood cover is now usually included, but policyholders who do not have flood cover can arrange to have it included for a small additional premium; if you live in an area particularly liable to flooding, a slightly higher premium will be payable. Flood cover for contents has always been included as part of the normal policy.
Provided the damage does not occur when the house is left unfurnished for a long period, you can usually claim under the building or building and contents policy for the accidental breakage of windows, glass in doors, wash-basins, sinks and cisterns. It is also possible to claim under a contents only policy if you are liable for such damage as tenant under the terms of your lease.
Your building policy usually includes outhouses provided they are used for domestic purposes. A self-employed carpenter, using an outhouse as his workshop would certainly require a separate policy.
There is usually a small excess on breakage of fixed glass in greenhouses, verandas and conservatories. It is also possible to claim under a contents only policy if you are liable for such damage as tenant.
This section of a building policy covers damage caused as a direct result of fire — a coal falling onto the carpet or an oil heater accidentally overturning. It also applies to damage by smoke resulting from a fire and to water damage which may be caused in trying to put the fire out. The insurance does not, however, apply to damage caused by soot falling from an unswept chimney, by a smoking fire in the fireplace or to smoke given out by a badly adjusted oil heater.
The cover does apply to an explosion caused by a domestic boiler or by escaping gas, for example. Damage caused by an external explosion, such as the result of a gas leak in the street, is also covered. Theft The theft section of a contents policy covers articles actually stolen or others that are damaged by a burglar. Under the building section (and under the contents section, if you are liable as tenant) you can claim for any damage caused to the house itself by a burglar.
If you let or sub-let the whole or part of your house, you may not be covered against the risk of theft; it may, however, be possible in certain cases to include such risks, if you discuss it with your insurance company. Cover is not normally affected while the house is unoccupied (but not unfurnished) during a holiday, for example. There are other restrictions under a household contents policy; if you wish to cover them you should ask your broker or insurance company to make special arrangements for you. These restrictions include:
If you are considering moving house, there are some insurance complications. You will have to insure your belongings in transit, at the new house and possibly for a short time at both the new and old houses. Inform your insurance company of the move and of the new address to be registered on the policy. Cover will be given for the short time some of the goods are in both houses; but for the actual move you should arrange transit insurance. An insurance company will provide this or the removal contractor may include it as part of the service or arrange it on your behalf. Make sure your belongings are covered whatever the arrangement. If the furniture is to be stored in a depository, insure it against fire and theft — some companies offer a wider cover than others.
The moment contracts are exchanged, legal responsibility for a house becomes that of the new owner; so before this is done you should take out a building policy. Don’t terminate the policy on your old house until you have received the money for it. The house may be destroyed by fire and although the purchaser would be legally responsible, he or she may not have the money to complete payment if uninsured.
Statistics show the likelihood of insurance claims from people living in caravans — particularly as a result of fire — is considerably greater than from householders. For this reason premiums are higher and variations between terms offered by different companies are greater. In general, however, it is normally possible to insure both the vehicle and contents on a special caravan policy.
The cover given under such a policy is wider than that of a household policy. There are several exclusions including depreciation, wear and tear, mechanical breakdown, electrical failure and damage to tyres. Money and documents are not insured under the contents cover and there is usually a limit of five percent of the sum insured for valuable articles, unless separately specified. Make sure you understand exactly what the caravan policy will or will not cover.
Under the normal caravan policy, the owner or hirer is protected against claims by third parties for injury or damage arising from use of the caravan other than when it is being towed on the road.
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