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Why home insurance could be the best thing you ever bought

Imagine if your home burned down to the ground. Virtually everything you own, gone up in smoke. No roof over your head. Your life would literally be in ruins. But at least your insurance would provide funds to get you back on your feet. Unless, of course, you didn't have any. And that's the perilous position for an estimated 1.5million Brits. Millions more have inadequate cover, leaving themselves exposed to potential problems and shortfalls if they have to make a claim.

Home insurance is never going to be a fun purchase. But it is essential protection for your bricks and mortar and for your belongings, so it makes good sense to get the cover you need at the best possible price.

Here we run through the main things to look out for when buying home insurance so you get the right policy without paying a penny more than necessary. Do you need buildings cover?

There are two types of home insurance - buildings cover for the structure of the property and permanent fixtures, such as bathroom suites and kitchen units, and contents cover for belongings, including furniture, electric items, clothes and other items - anything that could be moved out of the home.

If you need buildings and contents insurance it is usually cheaper to buy both from one insurer.

If you have a mortgage, your lender will insist buildings cover is in place to protect its investment in case the property is destroyed. If you own your property outright, cover is just as vital - the risk of losing your house and home is just too great.

A word of caution: don't feel obliged to buy (or renew) your buildings insurance with your mortgage lender. It's highly likely that you could get a better deal elsewhere. Read more in our article 'The perils of buying home cover from your mortgage lender.'

If you rent or are in a leasehold property, the buildings insurance should be taken care of by the landlord or freeholder. If you live in a flat and own a share of the freehold, you and the others in the building should arrange a joint policy. Whatever the case, you'll need your own contents cover. Get the right amount of buildings cover

If you bought your house for, say, £300,000, you might think this should be the sum insured on your buildings insurance policy. But you need to insure the rebuild value, not the market price, because you want adequate funds to rebuild the property if it were destroyed.

In many areas, rebuild costs are lower than the market value - and they're higher where property values are low. You can check the rebuild value for your property via The Royal Institution of Chartered Surveyors. Choose the right level of contents cover

It takes most of us years to accumulate all the possessions that fill a home, so not surprisingly it can be difficult to calculate how much everything is worth - and that's what you need to do to get an accurate sum insured for a contents insurance policy.

But it is certainly worth the time and effort to get the number right. This is because, if your insurer finds out that you have insured your contents for less than they are worth, it might apply the same proportion to any pay-out it has to make on a claim.

So if your contents are worth £50,000 but you only have £40,000 of cover, you have 'under-insured' by 20%. This means that, if you put in a claim for £10,000, the insurer might only pay out £8,000.

Don't worry, though - help is at hand. MoneySupermarket's contents calculator shows you how to work out what cover you need. Protect your valuables

When you arrange cover, make sure you have protection for your valuables and for any items that you take away from home. Your contents policy will ask you to list items above a certain value - say, £1000 or £1500 - and there will be a maximum amount - perhaps £5,000 - for any single specified item. There will also be a total limit on what you can claim for specified items - this might be £10,000.

You may have to pay extra to cover your valuables when they are out of the home - but this is important protection for items such as jewellery, cameras and expensive bikes.

Another useful option is accidental damage cover, which would come into play if you spilt some wine on the carpet or knocked over a vase while dusting.

Are you safe and secure? Security is always important - burglary can be emotionally devastating and disruptive as well as painful financially, so anything that keeps thieves at bay is a good idea. But your contents insurance might also specify the sort of locks you should have on windows and doors, and it may require you to use them for the cover to be valid. You might get a discount if you fit an approved burglar alarm and belong to a Neighbourhood Watch scheme.

Fire alarms are also common sense - and once you've got them fitted, make sure you test them regularly.

If you have lots of valuables, consider having a safe. This might also attract a discount from your contents insurer.

Don't be excessive with your excess Home insurance policies carry a compulsory excess - the amount you must pay towards the cost of any claim. With buildings there will probably be two excesses - one for claims associated with storm damage, fire and flood, and one for subsidence risks. While the standard excess might be £100, the subsidence excess could be £1,000 or even higher if you live in a high-risk area.

Always check the level of any compulsory excess - this could determine your choice of policy.

It is possible to increase the excess, which has the effect of reducing the premium. But this can be a balancing act: if you make a claim, the amount you have to pay will probably be more than the amount you saved.

Shop around - don't renew automatically Shopping around can be well worth doing, so don't renew without checking if there is a cheaper deal on the market. Independent figures show that people save an average of £127 by using MoneySupermarket to compare prices rather than sticking with their existing insurer.

Article courtesy of MoneySupermarket published March 2012
 
You will pay for underinsurance

Imagine the shock if your home insurer refuses or only partially pays a claim for flood, fire of theft because you can’t back up your claim with evidence.

Most policies state ‘Proof of contents and values must be provided’, meaning they will want evidence such as receipts and/or photographs.

But the real knock-out blow comes if insurers refuse claims in total because of underinsurance - which a Direct Line report says is likely to be by at least £20,000 in a quarter of all households. In most cases underinsurance will result in the whole claim being reduced in proportion with the level of underinsurance.

This at a time when annual premiums for home cover will has risen above £200 according to the AA British Insurance Premium Index.

Tim Roots, managing director of Readyclaim (www.readyclaim.co.uk), says he reckons that as many as nine in 10 of households could have the problem of not being able to back a claim with proper evidence. Tim adds, “The problem is that people will take time to ensure they have the cheapest policy, but not take the time needed to ensure their assets are properly covered.”

His company offers a service providing secure storage for all photographs and receipts, as well as prompting you to provide annual valuation updates and warning if you have breached the sum assured. Cost is £11.99 for one year, £23.99 for three years (including VAT). In the event of a loss, instead of trying to find the receipts – if you kept them – this service allows you to quickly print out a full report with pictures.

With online security in mind, Tim adds that personal data such as your address is not required to open an account and only you can access your stored files through password security.

Tim says the need for such a service came home to him when he found out by chance from a gallery owner that a limited edition print be had bought for a few hundred pounds “had increased six times in value, which took it way past the amount specified in my insurance policy!”

www.money-marketuk.com/Mortgages/you-will-pay-for-underinsurance

Article by Stephen Spurdon appeared on Money Market UK on 11 January.

 
Ensure your home contents are fully protected this Christmas

THE company behind an innovative new software tool which records and values household assets is urging homeowners to ensure new and existing items in the home are covered in the event of a burglary over the Christmas period.

The festive season traditionally sees a sharp increase in domestic burglary as homes are filled with valuable presents.

Research suggests that January is the worst month for domestic burglary as thieves are on the prowl for expensive items in the home. There are 11%* more burglaries in January than the annual national average, figures reveal.

Despite the recession, Christmas spending also remains high. Brits are predicted to spend an average of £560 celebrating Christmas this year**.

With this in mind, homeowners are now able to protect their assets with readyclaim, which has been developed as an affordable way to enable every household to have a virtual catalogue of their home contents, such as big-ticket electrical items, clothing, furniture and jewellery, with the aid of icons.

Homeowners simply take digital images of their assets in each room, plus any relevant documents including invoices, valuations or receipts, and attach them to the asset icon which can then be uploaded to readyclaim’s secure server.

More than simply a contents calculator, the system has been launched to ensure that everyone insures the true value of their home in a bid to combat claims disputes.

Tim Roots, founder of readyclaim, said: “readyclaim is a useful tool for homeowners throughout the year but Christmas is a time when most homes are full of expensive items such as new PS3’s, the latest iPhones and iPads and Plasma TVs.

“In the unfortunate event of a burglary, not being able to prove the value of your contents or being under insured can cause serious problems if you have to make an insurance claim, as your insurance company may not pay out the full cost to replace lost or damaged items.”

Insurers will ask for proof of ownership in the event of a substantial claim, including receipts and photographs, warns Roots.

“On average, a British household will spend around £560 on presents and other seasonal products meaning the worth of your contents significantly increases.

“By using the readyclaim system, homeowners are given total peace of mind, knowing that they have an accurate and real-time account of their assets stored on our secure server, thus removing the chance of long, expensive and drawn out insurance disputes.”

Homeowners can set up a readyclaim home account quickly and easily, which costs just £11.99 a year or £23.99 for three years, which can accessed by PC and an iPhone or Android app.

To open an account, visit the website www.readyclaim.co.uk where you can also download an app.

Sources: *According to HSBC

**According to Crimestoppers

 
Landlords benefit from extra protection with new online asset management tool

AN innovative software tool has been launched to help landlords record and value contents and assets in fully furnished properties.

Figures reveal that millions are running the risk of not being able to make an accurate home contents insurance claim in the event of burglary, fire, accidental damage or flood.

Readyclaim, a unique web hosted asset management system, can help landlords manage fixed and mobile assets including furniture, carpets and other items in let properties.

Property owners are also facing the prospect of paying higher premiums for home insurance cover that may not pay out when, as often stated in policy documentation small print, proof of contents and values cannot be provided.

The online tool, which can be accessed by PC and/or an iPhone or Android app, allows owners to take digital images of their assets in each room, plus any relevant documents including invoices, valuations or receipts, and attach them to the asset icon which can then be uploaded to readyclaim’s secure server.

More than simply a contents calculator, the system has been launched to ensure that owners insure the true value of their assets in a bid to combat claims disputes.

Tim Roots, founder of readyclaim said: “Not being able to prove the value of contents or being under insured can be a real issue for landlords with multiple properties, as insurers may not pay out the full cost to replace lost or damaged items.

“Not many of us realise that insurers will ask for proof of ownership in the event of a substantial claim, which can include purchasing documentation and photographs.”

“With the readyclaim system, landlords are given total peace of mind, knowing that they have an accurate and real-time account of their assets stored on our secure server, thus removing the chance of long, expensive and drawn out insurance disputes.

A readyclaim account can be set up quickly and easily, costing just £11.99 a year or £23.99 for three years.

To open an account, visit the website www.readyclaim.co.uk where you can also download an app (for Apple or Android phones).

 
Harsh treatment by insurers despite hiked premiums

Insurers are raking in millions of pounds in profits. But while shareholders are cashing in, policyholders are being hung out to dry. Complaints about insurers are soaring as increasing numbers of honest customers find their claims are being rejected.

Many people feel unfairly treated by insurers whose cover we pay hundreds of pounds for over many years. Yet while claims are refused, insurers make bigger profits and are hiking premiums.

Admiral, for example, made £160.6million in the first six months of this year, 27 per cent more than in 2010. As a result, its shareholders have received a healthy dividend of 8.4  per cent.

Aviva made £242 million profit on general insurance, up 6 per cent on last year. Its shareholders will draw an 8.4 per cent dividend. Meanwhile, the average annual comprehensive car insurance premium rose by a staggering 40 per cent between March 2010 and March 2011 and is now £1,449 a year.

Home insurance has also hit a record high, having increased by 14.3 per cent in the past year to £290, according to the AA. Despite hiking premiums, firms are desperate to make more money from policies. On car insurance alone insurers paid out £1.24 in claims for every £1 they took in premiums in 2010, according to analysts Towers Watson.

Part of this loss is due to fraud. In 2010 insurers uncovered 133,000 fraudulent insurance claims worth £919 million — that is 2,500 every week — up 9 per cent on 2009. As a result, firms are getting tough when analysing claims, with many relying on small print and tiny details to ensure they don’t pay out.

A RISING TIDE OF COMPLAINTS ON INSURANCE

While insurers squeeze households more tightly, the Financial Ombudsman Service, which settles disputes between consumers and insurers, has seen an increase in the number of complaints.

Last year, it received 20,978 complaints about general insurance (excluding payment protection insurance), 6 per cent up on the previous year.

In one of the most shocking cases, an elderly couple were refused a payout from their home insurer after they had been burgled. The couple were asleep when thieves broke in during the night and attacked them. After stealing several items, the raiders used the couple’s front door keys to unlock the door and let themselves out.

Astonishingly, the insurer rejected the claim because the small print read that a ‘forcible entrance and exit’ had to have occurred. The Ombudsman would not name the insurer, but ordered it to pay up immediately.

A homeowner from Reading went on holiday and returned home to find he had been burgled, with items such as the television, games console, laptop and other electrical equipment being taken.

When filling in his claims form, he estimated that he’d lost in excess of £7000 worth of goods but his insurer wanted proof of purchase and photographs of many of the items he had stolen.

Not having receipts or photos, his insurer only offered to pay out just over 75 per cent of his total claim.

In such circumstances, you would hope your insurance company would settle your claim swiftly. Don’t bet on it.

Thousands of people experience unacceptable delays when claiming. The Ombudsman upholds more than two in every three complaints made about insurer Hastings — more than any other company. But consumers’ claims were also upheld 61 per cent of the time against giant bank Lloyds TSB, 60 per cent of the time against Bupa and 59 per cent of the time against Axa.

IS ANYTHING BEING DONE?

The situation has forced the Government to step in, with new laws currently going through the House of Lords.

The Consumer Insurance (Disclosure and Representations) Bill aims to stop insurers refusing to pay up because the customer was never asked the right questions when they bought the policy.

It will shift the emphasis away from a customer’s duty to disclose all necessary information, and instead force insurers to ask specific questions.

The new rules, which should become law in 2013, will be particularly useful for people who might forget to reveal particular health conditions when taking out a medical or travel policy.

But campaigners say the Bill will not be enough to tackle the industry’s problems. A major issue is that insurers use vague terms, and send out pages of small print, so they can interpret the rules in whichever way they choose.

As an example, a policy may state someone has to take ‘reasonable care’ to protect their belongings — but what this means is open to interpretation.

James Daley, editor of Which? Money, says: “Insurers are very happy to take your premiums, but they make it as difficult as possible to make a claim. This is not fair.

“If insurers do have exclusions, these need to be spelt out to people at the point of sale, not years later when they come to claim.”

WHAT THE INSURERS SAY

Trade body the Association of British Insurers acknowledges that fraud is a huge issue for companies.

Nick Starling, director-general at the Association of British Insurers, says: “Every year insurers help millions of people recover financially when the worst happens. But we also need to protect honest customers from fraudulent claimants, who push up the cost of insurance.

“So insurers strive to strike the right balance between paying genuine claims as quickly as possible, and weeding out the cheats.”

Tim Roots, founder of readyclaim, an innovative new software tool to help homeowners record and value their assets, commented: “Research shows that over 90% of householders wouldn’t be able to make an accurate home contents insurance claim in the event of a major fire, theft or flood. On top of that, we are all under insured an average of 30% lower than the true value of our contents.

“Not being able to prove the value of your contents or being under insured can cause serious problems if you have to make an insurance claim, as your insurance company may not pay out the full cost to replace lost or damaged items.

“Not many of us realise that insurers will ask for proof of ownership in the event of a substantial claim, which can include purchasing documentation and photographs.”

“Filing invoices and photos in a cupboard can be useless in the event of a fire or flood and this is where readyclaim comes in. By using the readyclaim system, homeowners are given total peace of mind, knowing that they have an accurate and real-time account of their assets stored on our secure server, thus removing the chance of long, expensive and drawn out insurance disputes.”

www.readyclaim.co.uk

* Some of the content of this article has been sourced from www.thisismoney.co.uk

 
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