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Insurance Guide
Buildings Insurance
Most mortgage lenders insist that you have Buildings Insurance as part of your overall mortgage package. Buildings insurance policies are often index-linked which means they rise automatically each year in line with the Retail Price Index (RPI).
Buildings Insurance usually covers the structure of your home from damage arising from:
» Severe weather - storms, lightening, floods.
» Theft or vandalism.
» Fire, smoke, explosions.
» Subsidence.
» Burst pipes.
» Civil commotion.
» Water or oil leakages.
» Impact from vehicles, falling trees, aircraft, masts, aerials.
Things to check:
» Check if your mortgage company are offering any special deals on buildings insurance. It may even be included in your existing mortgage.
» Check the amount that your insurance policy actually covers the real value of your property. If you think it is too low, increase your cover.
» Do not give false information when applying for insurance cover. It will invalidate your policy.
» Ensure that your buildings insurance policy starts from the moment you sign the contract, you are legally bound to buy the property as soon as you've signed the contract, not from the date you move in. If anything happens to the house between those dates, you may not receive an insurance payout.
» Check the "Excess" value (the minimum amount you have pay towards any claim) and make sure it is satisfactory.
» Review your insurance policy frequently and update it if necessary - it is in your own best interests.
» If you make any alterations, structural or otherwise, it is in your best interests to advise the insurance company.
» Always read the small print... it's a pain, but it is essential to do so.
Contents Insurance
Contents insurance policies usually covers non-fixed items inside your house. There are many different types of policies so you should shop around to see which one is best suited to you.
Contents Insurance normally protects you from:
» Severe weather, including storms, lightening or flooding.
» Theft or vandalism.
» Fire, smoke or explosions.
» Subsidence.
» Burst pipes.
» Civil commotion.
» Earthquakes.
» Water or oil leaks.
» Impact from vehicles or falling trees.
Your policy will cover your possessions up to a certain specified amount, either stated by you, or categorised by the insurance company. There are two main types of cover:
1. New for old - Items are replaced at their current market value.
2. Indemnity Cover - The insurance company will taken into account the general depreciation of items.
Check which type of cover the insurance company is proposing (new for old is usually a better option).
Some policies have special features. This can include legal expenses, cover for possessions in your vehicle, food spoilage in freezers, garage cover, outbuildings cover etc. If you want to keep your insurance premium to a minimum, ask the insurer about leaving off special features, or try raising the excess. The insurer may ask you to submit a contents list, with individual items over a certain value specifically priced. This varies with different insurance companies.
Things to check
» Calculate the overall value of all your possessions before shopping around for an policy.
» If you are going for a new for old policy, ensure you value your contents at their replacement value, not at their actual value.
» When moving house, check with the insurer to see if your contents are covered, and inform them of the precise date that your move is taking place.
» Examine any limitations and upper limit pay-outs before purchasing the insurance.
» Check if computer equipment, bicycles and special valuables have to be insured separately.
» Check if you are covered for accidental damage.
» Don't give any false information when applying for insurance. This will invalidate your policy and you will be unable to make a claim.
» Don't underestimate the value of your contents.
» Check your policy frequently and update it if necessary.
» Check your excess limit, especially for money, valuables and high value articles.
» When obtaining insurance quotes, say whether your house is alarmed, has lockable windows, double glazing or any other security features and try to negotiate a discount on the strength of any of these.
» Always read the small print otherwise you are leaving yourself wide open to any opt-out clauses.
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