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Home insurance: Five easy steps to save money

By MoneySupermarket.com  |  Posted: September 12, 2012

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You've probably looked at the ways in which you can cut the cost of your car insurance, but there are very worthwhile savings to be had on home insurance as well.

Car insurance cost-cutting tactics can be straightforward, such as limiting the number of miles you cover each year to simply shopping around to find the best quote.

Thankfully, there are similar easy wins when it comes to ways in which you can reduce the price of your home insurance premium.

If you started by following a few key guidelines and comparing quotes with MoneySupermarket, you could chop up to £200 off your home insurance costs.

So let's take a look at how you can save money without compromising on the quality of cover...

1. Shop around for the best quote

Arguably, the simplest way to cut the cost of your home insurance is to shop around to find the level of cover that best suits your needs at the cheapest price, and by using MoneySupermarket's comparison tool you can instantly compare quotes from over 80 companies.

And MoneySupermarket has now teamed up with a number of leading home insurance companies to bring you a range of exclusive deals you won't find on any other price comparison site, including a £30 cashback offer when you buy buildings and contents cover combined and the chance to secure £25 of M&S shopping vouchers when you buy.

Simply carry out a home insurance quote and see which policy is best suited your circumstances.

And remember, it rarely pays to stay loyal to one insurer and you should certainly not accept the auto renewal price as this won't be the best value cover on the market. Companies often keep the best rates or special offers for new customers.

2. Improve your home security

As with car insurance, there's a good chance insurers will reduce the price of your home insurance policy if you make sure you have adequate security systems fitted.

However, not all security measures will automatically reduce the cost of cover so you must check with your insurer before you install anything. If you were considering making some DIY Home Alone-style amendments to your current security devices, it's probably worth having a rethink.

If you are installing a burglar alarm, for example, make sure it is fitted by a firm approved by the National Approval Council for Security Systems and make sure that it is regularly maintained as per the manufacturer's guidelines.

You should also make sure it is set in accordance with the terms of your insurance, which could include alarming certain rooms and external doors and windows at night time and fully activating it when the house is empty. Failure to do this could result in your policy being invalidated and a burglary claim not being paid.

When fitting door locks, make sure you consult with your insurer first, as they will probably specify that locks meet the British Safety Standard and are either a cylinder rim deadlock or a five-lever mortise lock that conforms to BS3621.

You should make sure that key-operated locks are fitted to all external windows and install smoke alarms - even if these don't bring down the cost of cover they are an essential safety measure for every house.

If you fit any other type of lock there is a good chance that you will not see a reduction in the price of your policy.

And you should never say you have extra security fitted if you don't as this could invalidate your policy and mean that your insurer does not have to pay out in the event of a claim being made.

3. Combine your buildings and contents insurance

There are two types of home insurance - buildings cover and contents cover - and you can often save money by combining the two.

Buildings cover insures the structure of your home, from the roof to the foundations via the walls and windows, and also covers permanent fixtures such as a bathroom suite or fitted kitchen (including any built-in appliances that could not be readily taken with you if you moved).

This should cover your home in the event of damage caused by burst pipes, fire, flood, falling trees, storm and subsidence.

You will have to provide a rebuild valuation for your property in case it is destroyed, and this figure will probably differ from the purchase price of the house. In areas where property prices are high, the rebuild value will be lower than the market value. The same applies in reverse: in some places it could cost more to rebuild a property than the property would fetch at sale.

It is important to get the correct rebuild value of your property. If property prices are high in your neck of the woods and your use the potential sale price as your sum insured for buildings cover, you could end up paying too much. But if you underestimate the likely rebuild cost, you could end up with a shortfall should the worst happen.

You might find the rebuild cost of your home on your mortgage valuation. The Association of British Insurers offers a calculator that will show your rebuild cost here

Contents insurance covers all of the possessions you keep in your home - think of it as everything that you would take with you if you were to move house, as well as carpets, curtains etc. - against damage or loss through fire, flooding and theft as well as explosions and earthquakes.

As with the rebuild estimate, you should make sure that you value your possessions as accurately as possible, bearing in mind that your contents might be more valuable than you think. For instance, the average family of four estimates its contents to cost around £25,000 when the true value is closer to £55,000.

And, while you may be able to bring down the price of your premium with a lower estimate, this will mean that any claim you make will not be enough to cover replacement costs.

On the other hand, you don't want to overestimate the valuations as this could see you paying more than you have to for a level of cover that you don't even need. So try to make your estimates as accurate as possible. You can find MoneySupermarket's calculator here

A good way to bring the cost down without potentially leaving yourself short is to combine your buildings and contents insurance and take them both out with the same insurer. This is often cheaper as most insurers offer a discount for customers who take out both at the same time.

4. Increase your excess

Another tip - and one taken straight from the book of cheap car insurance tips - is to offer to pay a higher voluntary excess (the amount you pay towards a claim before the insurer pays out). The more you volunteer to pay, the bigger your reward in terms of a reduced premium.

This is on top of any compulsory excess, so if you make a claim for £1,000 and you have a compulsory excess of £100 and a voluntary excess of £300, then you will have to pay £400 towards your claim and your insurer will then pay the remaining £600.

So while it is a tried and trusted way to bring down the cost of cover, you need to make sure that, in the event of a claim, you will be able foot the bill for the excess else you could find yourself with a shortfall.

5. Pay for your policy up front

Another tip that will be familiar to you if you have ever looked at ways in which you can lower your car insurance costs is paying for your home insurance policy up front. Paying in one go can save you money as you will avoid the interest charges that are levied if you choose to pay in monthly instalments.

For everything you need to know about home insurance, including some more money savings tips, read our guide here.

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