Seven deadly sins: the home insurance traps that could cost you dearly
Price comparison sites offer the promise of low insurance premiums, but could leave you with cover that turns out to be much more expensive in the long run.
Everyone wants a good deal on their home insurance. At a time when Britons are counting the pennies more closely than ever, it’s natural to be searching for the cheapest policy, particularly since insurers have been raising their premiums. That’s why so many people use online comparison sites, which supposedly scan the market to find you the lowest prices.
Here’s the thing though. The cheapest policies upfront often end up costing you more – sometimes much more. Price comparison sites don’t give you much help with understanding what different policies cover, or which optional elements of insurance are worth paying for. What seems like a bargain may turn out to be anything but.
Below, we look at seven examples of these traps.
1. The accidental damage ambush
Accidental damage claims account for more than a third of all claims on home insurance. But search for a policy online and you will routinely be asked to accept limitations to your cover in return for a lower premium. There may be a cap on the pay-out or small print that restricts when you can claim. Insurers may look to deny your claim under “wear-and-tear” exclusions, even though your loss was caused by a genuine accident. The result is that you end up out-of-pocket. Look out for policies that offer both standard and optional or extended cover; the former may be cheaper, but will limit your protection.
2. The home emergency hook
If something goes seriously wrong in your home – a plumbing disaster, say, or an electrical mishap – you need help quickly. Home emergency cover gives you access to a phone line you can ring at any time of day or night to request that a contractor gets to you fast, typically with no call-out fees to pay. But on most insurance policies, this is an optional extra and will cost you a few pounds more. It’s an obvious saving if you’re looking online to cut costs, but often proves to be an expensive – and anxiety-inducing – omission.
3. The trouble with travel
The best home insurance policies cover you when you’re away from home too; if your possessions are stolen from your car, say, you need to be able to claim. Again, however, anyone buying insurance online will be offered the option of reducing their premiums by limiting this feature of the policy – through a lower total maximum claim, say, or caps on single items. You’ll lose out simply because you were in the wrong place when your insurance was needed.
4. The climate change conundrum
The changing climate is driving more extreme weather events and making problems such as flooding more common. If you live in an area considered susceptible to such problems, insurers may endorse your policies – restrict what they’ll pay out on certain types of claims or demand higher excesses. That won’t always be obvious, or easy to understand, but can cost you dearly. There may also be limits on what the policy covers – will you be able to claim in full for alternative accommodation costs, for example, or costs incurred because you’re having to travel much further?
5. The holiday let howler
The number of Britons renting out their houses for short periods on platforms such as AirBnB has increased by more than 30% over the past five years. But the second you let your house out to paying guests – or even a single room in it – you risk invalidating your home insurance. That could be disastrous; if your insurer hasn’t been made aware that you are letting all or part of your property, you run the risk of any claim you need to make being declined or not paid in full, whether or not it’s connected to the letting. This isn’t usually mentioned when you’re buying home insurance online, but you’ll often need specialist cover.
6. The fraud failure
The UK is suffering from a fraud epidemic, with identity theft alone up by 45% last year. What many people don’t realise is their home insurance can be a huge help: if you’ve signed up for legal cover as part of your policy, it will pay many of your costs as you attempt to recover from an identity fraud, as well as providing support with everything from an employment dispute to a personal injury claim. However, legal cover is typically an optional extra – again, if you’re buying home insurance online, the value of this cover may not be obvious; many people therefore decline it to save money but come to regret the decision later.
7. The buildings insurance booby trap
Insurers need detailed information about your property to make informed decisions about what to charge you for cover; if you provide incorrect information, even by mistake, the insurer may reject any claim you end up making, or only pay part of it. The problem is that the information insurers ask for can be technical – they may need to know about the structure of your property, for example, or the specifications of your locks. If you’re completing an application online, with no help, it’s easy to get something wrong inadvertently. But mistakes may come back to haunt you.
How to avoid getting caught out
The best way to avoid falling into these traps – or other common home insurance pitfalls – is to get some professional advice when you’re looking for cover. Price comparison sites do what they say on the tin – they enable you to compare prices – but that’s only half the story. The best policy for you is one that is competitively priced but, crucially, gives you the cover that you need.
Nest GI is an independent company offering free impartial advice regarding all types of property insurance. We’ll assess your needs and then recommend the best value policy for you from our panel of over 90 insurers.
Don’t wait until you’re caught out. We believe no-one should be financially penalised for switching their insurance to a better value provider, so our unique “free switch” guarantee refunds any administration or early cancellation charges imposed by your existing insurer.
To book a no obligation conversation or for further information, click here, email: [email protected] or call 03330 110555 (our office hours are Monday to Thursday 10am – 6:30pm, and Friday 10am – 5:30pm).
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