How to Decide How Much Home
Insurance You Need
Deciding on how much home insurance cover
to take out can be tricky
because the costs involved in replacing contents or rebuilding
damaged structures are sure to vary over time. Not all
of us are financial wizards who can keep a track of inflation. It is, however, important to
carefully assess the extent of home cover that you need, so that you don’t land
up with higher premiums than necessary, or be under-insured, which
can be a lot worse.
Determining the Level of Cover you need
Home insurance includes both building and
When insuring the building or the structure It is common sense to get the building
insured for its rebuild value and not the market value, in order to
cover for the inflationary costs of building materials and services,
regardless of how high the present market prices are. Building
insurance often includes fittings, as in modular kitchens and fitted
Homeowners can use the home insurance calculator on the Building
Cost Information Service (BCIS) website to get a fair idea of the
rebuild value of their homes.
Insuring personal belongings, valuables and home contents is
essential for many people, given the expense of replacing personal
items (especially electrical gadgets), as
well as the high rate of break-ins and thefts. Online
calculators can help assess the value of contents, or you may wish
to use the old-fashioned but still very effective method of listing every item
in your home. This can prove a very wise decision if you do in fact suffer a
loss because it is easy to overlook missing items at a traumatic time such as
after a burglary, but a list of your possessions would make it much easier to
fill in your claims form. However, make sure to factor in depreciation and any
wear-and-tear wherever applicable.
There are three different content insurance options being offered.
• Sum Insured – Select contents that are covered based on the
• Unlimited Sum Insured – All contents are covered, by default .
• Bedrooms – The value of the contents cover is determined by the
number of bedrooms in the home. This option usually offers between
£40,000 and £50,000 of standard coverage, making it suitable for
Wider coverage for individual expensive items is often offered at an additional premium
and the choice will vary from one insurer to another. You may need to specify
valuable personal belongings, especially easily portable devices, and also the data
stored on these devices; sometimes this can be more valuable than
the devices themselves.
There is often a choice between indemnity cover and replacements.
Most content insurance schemes pay for replacing damaged or lost
items with new ones, or simply reimburse the current value of the
insured items. Replacements usually come at a higher premium.
The scope of content cover and the exact list of items covered will
vary from one insurance provider to another. Shopping around for a
scheme that best suits one’s belongings is a must.
The process doesn’t end here, for home contents can often increase
during festive occasions such as Christmas (sadly a peak period for burglaries)
birthdays etc. Updating the
contents cover to include any new major addition to the home collection
is a must to guard against any nasty shocks.
Thinking that 'it won't happen to you' can prove very expensive.
Statistics from the Association of British Insurers reveal that it
has dealt with building insurance claims worth £9 million a day
during the year 2011. Just make sure that you aren’t caught
Copyright Dawn Phillips All