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Home insurance and how to reduce premiums

What you should look for from a home insurance policy

Home insurance and how to reduce premiums

For most people their home and its contents are the most important and expensive investment of their lives and so it's understandably important to want to protect them. This is where home insurance comes in.

Of course not all home insurance policies are the same - cover levels and premiums can vary widely between providers, so here we look at what to consider when you take out a policy and how to get the right deal for you at the right price.

What should you look for from a home insurance policy?

Home insurance is divided into two areas that can either be taken out together or exclusively. These are:

- Buildings insurance: This is designed to protect the structure of your home as well as its permanent fixtures and fittings. Depending on the policy you take out, buildings insurance will also usually incorporate outbuildings, such as sheds and greenhouses, as well as underground pipes and cables and even glass in doors and windows. Typically it protects the home against risks such as storm damage, floods, subsidence, fire, theft and malicious damage.

- Contents insurance: This covers the non-permanent items within a home such as your furniture, clothing, electrical items and other household goods (subject to policy exclusions) against risks including thefts, fires, flooding, storm damage and more. Importantly, some contents insurance policies offer 'new for old' replacements of items - meaning you get a brand new replacement for any contents damaged in an insured event; while others offer 'wear and tear' cover with a percentage of what you paid deducted for depreciation.

There may also be a number of additional features offered by a home insurance company either as 'standard', meaning they are offered as part of the regular policy terms; or as 'optional extras' - additional protection which typically costs an added premium. Some of the features you may wish to look out for include:

- Accidental damage cover: This normally applies to electrical items but extended accidental damage may cover other items in your home against accidents.

- Freezer contents: This covers items kept in your freezer up to a pre-determined limit if they are ruined as a result of an insured event.

- Home emergency cover: Helps cover a call-out charge from a qualified tradesman within a set time period in case you lose an essential service.

- Replacement locks: Some home insurance companies will pay for replacement locks if your keys are stolen.

In addition to examining the levels of cover available, also look for policy exclusions (these are circumstances in which you will not be covered). Also bear in mind that most contents policies carry a specified limit per item - this is the maximum amount you can claim for any one item and is usually set at around £1,500.

What else should you be aware of?

When shopping around for home insurance, don't forget to consider the following:

- Excess levels: An excess is your contribution towards a claim and is normally divided into a compulsory excess set by an insurer and a voluntary excess which you agree to pay, when taking the policy out, in case a claim is ever necessary. Increasing the voluntary excess usually lowers premiums, but it should only be set at a level you can comfortably afford.

- No-claims discounts: Some home insurance companies offer no-claims discounts based on the number of years you go without making a claim on your policy.

How can you reduce your home insurance premiums?

The first step to lowering home insurance premiums is to ensure the quotes you are receiving are competitive. To do this, use a comparison website to compare quotes from a number of insurance companies - the leading websites compare policies from as many as 65 providers with one search.

Insurance companies base their premiums on risk - the more likely you are to make a claim, the higher your premiums will be. Therefore lowering your 'risk' to an insurer can help you save - here are some tips:

- Buy a combined policy: Most insurance companies offer buildings and contents insurance together - placing your business with one insurance company will usually earn you a discount.

- Increase security: Burglar alarms, time-switch lights and security lighting could all help you save. Consult your insurance provider about which systems it recommends to maximise your savings.

- Increase your voluntary excess: By agreeing to pay more towards a potential claim you can lower premiums - but be careful to keep the excess at a level that's comfortable for you to afford.

- Join a Neighbourhood Watch scheme: Discounts up to five per cent are available with some home insurance providers if you team up with your neighbours to make your street a safer place.

- Pay annually: You may be able to avoid monthly interest charges by paying for your home insurance upfront.

- Prevent house fires: Fitting smoke alarms and fire extinguishers in your home could limit fire damage and earn discounts with your insurer. You could even save money by quitting smoking.

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