16 June 2021

The cheapest policy is the best choice for me – or is it?

By Steve Moores, Dip CII CLIENT DIRECTOR

We have all seen the websites promising to find you the cheapest possible home insurance quote, but we’re not buying groceries. All insurance policies are not the same. You would be forgiven for buying on price. After all, it’s the simplest factor there is. And as you’re buying a promise, you won’t discover the value of what you’ve bought until you have a claim. It is only then that you’ll understand the saying, ‘buy cheap, pay twice’. By then though, it’s too late!

Here are some pointers:

Standard policies….

  • Tend to have an ‘Average’ This reduces the amount paid out if you are underinsured.
  • Have lower inner limits for things like alternative accommodation, finding a leak, outdoor contents.
  • Will not cover your contents away from the home automatically. You will need a separate ‘Personal Possessions’ section for that.
  • Are usually ‘Perils’ based rather than ‘All Risks’.

A ‘Perils’ based policy covers a list of things and if your claim is not on the list, it is not insured. Perils policies tend to be cheaper, but not always. Bigger properties, higher value items, or those with complex living arrangements are more suited to ‘All Risks’ policies which tend to have lower rates, especially on the buildings.

An ‘All Risks’ policy covers everything except that which is excluded. It means more eventualities are going to be covered, so it is harder for an insurer to decline your claim.

Take a look at your policy.

If there’s a list of Fire, Flood, Escape of Water, Storm etc, then it is a perils-based policy. That does not mean it’s bad, but you should know what you’re buying.

Perils-based policies are fine. However, in our opinion, they are not suitable for larger homes, older homes or high value homes or contents.

Ultimately, you may not know what you have bought until you have a claim. Speak to an experienced broker and ensure that you are not left disappointed should you need to claim.

If you need more advice on your household policy, then call us on 020 7543 2801.

Find out more about our Home Insurance

Related Articles