Martin Lewis: Home Insurance

Stop letting home insurers (price) walk all over you

Price walking is a clever technique many home insurance providers use to make loyal customers pay more. Each year if you stick with them they ‘walk’ up the price of cover – never too quickly to cause alarm, but step, step, step, until they reach their goal. After five years or so you can easily be paying more than 50% over the odds. 

So ask yourself, when did you last change your home insurance provider? If the answer is more than a year ago, you’re most likely paying a ‘loyalty penalty’ – far more than you’d pay the same company as a new customer. Yet you can easily stop this, and put more money in your pocket without sacrificing quality of cover. 

The key five steps to getting the right deal on your home insurance are…


Step 1: Turn your house upside down to define the right cover
There are two elements to home insurance – buildings and contents. An easy way to work out what’s covered is to imagine turning your home upside down: everything that stays put comes under buildings. If it falls out, it’s contents. A joint policy is often easier as it means no jurisdictional disputes between firms.

Buildings insurance is only usually needed by freeholders, not renters or leaseholders. You only need to insure the rebuild cost – so how much it would cost to rebuild your home should it get knocked down – rather than the market value, which is the amount it might sell for. To find your rebuild value, there’s a free calculator at abi.bcis.co.uk.

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Contents cover is for everyone. Make sure that you don’t under insure – to cut costs – thinking you’ll never claim the full amount. If you do, it could mean you’re then paid less when if and when you do make a claim. And you often have much more value in your home than you think. Many insurers have useful calculators online to help calculate the amount.

You should also go through all the details of things that can make your house safer. Remember insurance pricing is based on a risk assessment. There’s a huge variety of things can impact on the premium you pay. There’s full help on this and other steps in my detailed guide at www.moneysavingexpert.com/homeinsurance.

Step 2: Don’t just use one comparison site – combine them
Comparison sites are a quick and easy way to find cheap quotes if you’ve relatively straightforward circumstances. Yet in truth they’re not actually comparison sites, they are marketplaces, as they can have special deals and prices with different insurers (but should never be more expensive than going direct). 

So the best thing to do is to combine a few of them to get a spread of insurers and prices. You can simply open a few windows at a time and put the same information in different ones. 

Step 3: Check insurers that comparison sites miss
Two of the big insurers, www.aviva.co.uk and www.directline.com are not included on comparison sites, so check them separately, especially when they have discounts (Aviva is currently offering a discount of 20% for policies bought online). Also there can be a range of special promo deals that aren’t included on comparison sites.  When they’re live they’re listed on www.moneysavingexpert.com/homeinsurance, so keep an eye out.

Step 4: If you want to stay put, haggle
Once you’ve found a cheaper policy – you can always try taking the price to your existing provider and ask them to see if they will match it – they often will. For example, in a recent poll I did, 76% of customers who haggled with Direct Line said they had success, while 89% did with Admiral and 75% with Hastings Direct. So it’s worth a try.

Step 5: If you’re switching, once you know what you’re getting, check for cashback
Once you know your cheapest policy and crucially you’ve checked IT’S RIGHT FOR YOU, then check if you can earn cashback using a cashback site such as Topcashback.co.uk or www.Quidco.com. These sites pay you if you click through them to other companies and purchase something – such as home insurance. 

This usually works, but there can be tracking issues, so see this as the icing on the cake rather than a core way to choose. If you’ve got time and your top three policies are all much of a muchness, it can be worth seeing the cashback on offer for all three. 

On occasion a few people even find that the cashback is higher than the cost of their insurance so are actually getting paid to get cover.

Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 13 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/latesttip.

 

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