Top 5 Tips for Saving Money on your Home Insurance

If you are a homeowner with a mortgage, then you are legally obliged to have home (building) insurance.

So, with such a large percentage of the population paying this annual fee, you would think that everyone knows the simple ways to save money on their home insurance.

Wrong!

As a child, we rarely discuss home insurance with our teachers or parents. This means that, when it’s finally time to move out, many first-time-buyers don’t know how to get the best price for their home insurance.

And it’s not just first-time-buyers who struggle! With the market constantly changing, experienced homeowners often ask me where they can the best deal, and what they can do to bring the price of home insurance down.

Look no further. In this blog, I have highlighted five key things you can do to save money on your home insurance.

1. Not so fast! Consider all your options.

I’m about to foil a common misconception.

You can buy insurance from any provider, no matter who you get your mortgage from!

It is critical that you consider all your home insurance options, and don’t automatically opt for your usual bank. Many banks in the competitive UK market want to incentivise their rivals’ customers to buy with them… and therefore, they give you a brilliant home insurance deal.

You can explore all your home insurance options through any of the following:

• Using price comparison sites
• Talking to a home insurance specialist
• Visiting different banks & asking what they can offer you

In this digital age, you may feel tempted to instantly use price comparison sites… But don’t underestimate the value of visiting a bank in-person! When you are sitting opposite a salesperson, you can do some haggling, and maybe get a better deal than you might’ve found online.

2. Buy a combined policy with the same provider.

Home insurance comes in two parts: building insurance (insuring the physical property) and contents insurance (insuring what’s inside the property).

If you have an outstanding mortgage, then you are legally obliged to have building insurance. But contents insurance is optional, and only some opt for this.

Nevertheless, if you do purchase contents insurance… make sure to get it as part of a combined policy (alongside building insurance) with the same provider. By using the same insurance company for both, you will almost always be able to negotiate a cheaper price.

3. Pay Annually, not Monthly

This third step really is as simple as it seems. You get a better price on your home insurance when you pay annually, not monthly.

For some, spreading your payments over monthly instalments may seem more manageable in the short-term. But in the long-term, this is a more expensive option because you will be charged an additional fee.

Therefore, to improve your financial position, you should pay in annual instalments.

4. Review your price once every year

Insurance providers are getting sharper. More and more, they are offering wonderful prices to brand-new customers – but are increasing the cost for existing customers who stay on for longer than a year.

This is happening in response to consumers’ increased reliance on price comparison sites, including:

• USwitch
• Money Supermarket
• Compare The Market
• Confused.com
• GoCompare

Insurance companies want to rate highly on these sites, because so many people are using them. But unfortunately, their existing customers are paying the price!

The way you can combat this is simple: review your home insurance price once every year. Almost always, you will be given a better rate from another provider trying to attract new customers than your existing provider.

When it comes to home insurance, loyalty means nothing anymore! That’s why you need to review your price every year.

5. Build up your no claims bonus

Although I recommend reviewing your home insurance every year, this doesn’t mean that you shouldn’t pay attention to your no claims bonus!

Currently, there is not a fixed scheme in the UK for no claims bonuses on home insurance. Typically, with all things being equal, if you make a claim then your premium goes up.

Therefore, it is important that you do not make a claim for every tiny thing. For example, if your house requires a minor repair, it may be better to use your own money to sort out the problem, rather than make a claim. Doing this will protect your no claims bonus!

Another way to protect your no claims bonus is to improve security in your property. This will reduce the likelihood of you getting burgled/needing to make a claim, and therefore ensure you get a better price on future home insurance deals.

The realities of finding the right home insurance

In recent weeks, the office of fair trading has said that this practice of penalising loyal customers is wrong, and needs to stop. This is likely to mean that prices will go up for everyone, rather than loyal customers having it reduced.

Unfortunately, insurance companies are no longer rewarding their loyal customers – which makes it increasingly important that you review your home insurance price every year.

Furthermore, in these challenging times financially, it is even more important that you save money wherever possible. A financial advisor can provide you with actionable advice, tailored to your situation, to help you achieve this.

If you want to discuss how to save on your home insurance, then I can help. Contact me on [email protected] or call 07956 225 601