Ensure You're Insured

351propertyL

Cover up with the right insurance policy for you.

Buying the wrong insurance can be worse than having no insurance at all. If you buy the wrong insurance you may not simply have inappropriate cover, or not enough cover, you could find you have no cover at all, if you fall foul of excesses and exclusions. You will then have wasted your money on paying a premium for no return when you come to claim.

Anyone buying insurance needs to check exactly what they need to insure, and what the policy they proposing to buy actually covers them for - and make sure the two match up. People most likely to find themselves with the wrong cover are:

  • Those who are sold a policy by a third party, such as travel insurance by a travel agent, without studying the policy document first and checking that cover is adequate and the price is competitive.

  • Those who buy, typically online, with regard only to price, rather than checking the details of cover. A cheap policy with multi-section excesses, large excesses and multiple exclusions could prove very expensive in the long run if you need to claim. Research by Tesco Home Insurance found that almost one in five homeowners could be sacrificing important elements of cover by searching solely for the cheapest policy and not looking at cover limits.

  • Those who simply renew policies from year to year without checking if the terms and conditions have changed - for instance, if the size of the excesses has increased - and reviewing their own needs. If you have recently bought a new plasma TV, or some expensive jewellery, or a designer wardrobe for the wife, the chances are you need to review your household cover.

Financial research company Defaqto says, "The rise in expensive home entertainment systems means that an increasing number of homeowners are likely to be underinsured. As ever, customers need to check carefully that the quality of cover they are getting is adequate, because cheapest is rarely best."

Even if your circumstances have not changed, it can still pay to switch insurer to get a better deal. Research by Defaqto also found that keen competition to attract customers has meant that insurers are offering large discounts and incentives to new customers, while continuing to charge the same prices to loyal customers.

It found that the growing popularity of broadband internet usage has changed the way people now buy insurance, particularly home and motor insurance policies. Consumers now have an enormous amount of choice, and can easily compare prices online. "Previously customers got four or five quotes but now they can get dozens very easily," it said.

So, if you are intending to renew existing cover, make sure you are fully acquainted with your policy wording.

According to research by Tesco Home Insurance, more than a third of UK homeowners admit to leaving their home and contents insurance policy documents languishing in a drawer unread, instead of going through them to familiarise themselves with the level of cover and terms and conditions of their home and contents policy.

Over a third could also find they aren't insured for engagement rings or expensive watches, as they have never checked their insurers' individual article limits after splashing out on big ticket purchases.

Two out of five people concede that, although they are aware of their contents cover limit, it might not be enough, as they have never checked if it's sufficient for what they're actually insuring.

Allan Burns, head of Tesco Home Insurance, said, "We would urge all homeowners to read through their documents, to familiarise themselves with the terms and conditions of the policy they have purchased. If they are unsure of any points, they should contact their insurer for clarification." Tesco has produced the following checklist for people looking for household cover:

  • Decide what you need - buildings and contents cover, or contents only.

  • Purchasing your buildings and contents cover together is usually better value than buying from two providers.

  • When you're shopping around for the best price, also check that the policy limits and extent of cover are adequate for your needs - not all insurers are the same.

  • Identify any valuables worth more than your insurer's individual article limit (jewellery, plasma TV) - you'll need to specify these items on your policy.

  • Read your policy documents when you receive them, to familiarise yourself with the details. If you're in any doubt contact your insurer.

  • Make a note of all your home contents and how much they're worth in total - you don't want to be underinsured.

  • Keep your insurer updated with any changes that you think might have an impact on your policy.

  • Consider if you need personal belongings cover while out of your home. It may be a false economy leaving it off your policy.

  • Consider buying family legal protection cover - it could save you hundreds of pounds.

  • Consider buying accidental damage cover - especially if you're a DIY enthusiast or have accident-prone children.

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