It has been calculated that the average home in the UK contains belongings worth an estimated £35,000, a figure which is significantly higher than the average annual salary of £27,000. Despite the protection offered by a home insurance policy, 7.5 million homes in the UK have no home contents insurance. In this article we look at:
- What home insurance is
- What home insurance covers
- How much home insurance costs
- Reducing the cost of your home insurance
What is home insurance?
There are two types of home insurance policies: buildings and home contents. Buildings insurance covers the cost of any structural damage to the property as well as to its fixtures and fittings. Having this type of insurance is a prerequisite for anyone with a mortgage. If you’re in rented accommodation, this policy is the responsibility of your landlord.
Home contents insurance covers the damage, loss or theft of your personal belongings including furniture, electronic devices, electrical appliances, etc.
What does home insurance cover?
Policies may vary slightly in the cover they offer, but generally home insurance covers any damage caused by adverse weather conditions, fire, theft, flooding and problems like subsistence. Most policies don’t cover damage which was the direct result of the property not being properly maintained, nor for damage which occurred when the property was unoccupied for 30-60 days.
You can add optional extras to this basic policy such as covering:
- accidental damage
- personal belongings (for possessions often taken out of the home such as mobile devices)
- valuable items such as jewellery which exceed the single item limit
- legal expenses
- working from home
How much is home insurance?
The price of home insurance depend on factors like:
- where you live
- the size/condition of your home
- the value of your possessions
- the extent of your coverage
- the size of your excess (your financial contribution to any claim before the insurer has to pay)
- the pay-out for any previous claims (if any)
The average cost of a buildings insurance policy is £265 per year while the annual average cost of a home contents policy is £138. Although you can purchase these two policies from different insurers, many people prefer to take out a joint policy from the same provider as they’re entitled to a discount. The average yearly cost of a joint buildings/home contents policy is £309.
Are you looking for alternative ways to save money in your home? If your home appliances break down, many times you can make the repair yourself and save money on repair costs or even replacing the appliance. Click here for a comprehensive guide on DIY home appliance repairs.
Home insurance questions:
A home contents insurance policy is estimated to cost £59.22 per year on average. The total value of the contents of households that have no home contents policy is estimated to be £266 billion. The ABI estimated that the total value of possessions owned by households in Britain is £950 billion.
When deciding your premiums for your home insurance policy, insurance companies take special notice of the age of your home and the way it was constructed. Owners of older buildings would have to pay more in materials and wages to have parts of their house renovated or reconstructed, therefore pushing the price of their home insurance premiums higher.
If you are seeking to lower the cost of your home insurance premiums, start by requesting quotes from multiple home insurance providers and comparing the deals you are offered. You may wish to consider raising your deductible and purchasing other insurance policies from the same provider to receive further discounts. You may also wish to improve your home security to help lower your home contents insurance cost. Another way to lower the cost of this type of insurance is by evaluating the worth of your home contents on a semi-annual or annual basis, to ensure you are not overpaying for home contents no longer in your possession or of the same value as they previously held.
How can you reduce your home insurance?
Apart from increasing your excess and opting for less comprehensive cover, there are a number of ways you can reduce how much you pay for your insurance. One way is to pay every year in one lump sum instead of in monthly instalments. You can make savings of around 6% a year in this way.
Many insurance providers will also offer discounts if your home contains basic security devices such as fire, smoke and burglar alarms. Similarly, installing approved window and door locks will also reduce your insurance premiums.
Is home insurance tax deductible?
Unless you’re self-employed and run a business from your home, or you are a landlord who rents out property, the cost of your insurance premiums isn’t tax deductible.