Millions are wasting £100s overpaying for home insurance cover, yet with a mix of timing and tactics many can cut away the rot.
Six steps to cheaper home insurance cover
Step 1: Define the right cover. There’re two elements to home insurance: buildings and contents. Imagine you turn your home upside down; everything that stays put is buildings, if it falls, it’s contents.
– Buildings cover. You only need to reinsure the ‘rebuild cost’ (the amount it’d cost if you knocked it down and rebuilt).
– Contents cover. Many under-insure, thinking “I may have £20,000 worth of stuff but I’d never claim that much”. Again, a mistake – if you’ve only insured half the value a claims insurer may only pay out half the claim.
Before you sign up check that the firm is regulated by the FCA. Then, if a claim is unfairly rejected, you can take them to the free financial-ombudsman.org.uk
Step 2: Combine multiple comparison sites to get a wide spread of insurers and prices. If you’re struggling to get a decent price, it could be because you’ve got non-normal circumstances, in which case a broker can give you a bespoke quote.
Step 3: Check insurers that comparison sites miss. Two of the big insurers, www.aviva.co.uk and www.directline.com, aren’t on comparison sites.
Step 4: How you pay matters. In most cases there’s no such thing as ‘paying monthly’. Insurers pay the annual fee for you via a loan, which you then pay back each month for a year, plus a hefty whack of interest. Avoid paying monthly if you can but if not check the interest rate, you may be better off paying it with a 0% credit card. If you’re struggling to keep up with your monthly payments your insurer has a duty to help you manage your costs.
Step 5: If you want to stay where you are, haggle. Once you’ve found a cheaper policy take the price to your existing provider and ask them to see if they’ll match it.
Step 6: If you’re switching, once you know what you’re getting, check for cashback using a cashback site such as www.topcashback.co.uk or another one called www.quidco.com – these sites can pay you £30 or more if you click through them.
Be careful though, there can be tracking issues, so always focus on getting the right policy first and see cashback as an added bonus; don’t let the cashback drag you into getting the wrong policy.
Martin Lewis @martinslewis
Martin Lewis is the founder of MoneySavingExpert.com. To join the 13 million people who get his free Money Tips weekly email