Home insurance – how to get the best deal

Home insurance prices can vary widely, so taking time to shop around could save you a lot of money. Comparison sites are a great place to start, but the cheapest deal might not give you the right cover. This page takes you through things to consider when you compare.

Comparing home insurance policies

Don’t forget

It could happen to you – over 2 million home insurance claims were made in 2010, and insurance companies paid out £9.8 million every day.

Source: Association of British Insurers

When you’re looking for the right home insurance deal you have to remember that the level and type of cover is just as important as the price. You need to compare levels of cover and check the exclusions (things you’re not insured for). This makes sure you get the features you need and you don’t pay more for unnecessary extras.

Don’t make assumptions. You might think some features of home insurance are standard (automatically included) but with some insurance companies they’ll be optional extras. For example:

  • Comprehensive accidental damage cover – fewer than one in five home insurance policies automatically cover you for damage you cause yourself, by accident.
  • Home emergency cover – fewer than one in five home insurance policies automatically provide help for home emergencies, and more than half don’t offer this as an option at all.
  • Personal belongings cover – items taken outside the home are usually not covered as part of a standard home contents policy.

Check the excess. This is the amount of the claim that you have to pay yourself. Four out of ten of all policies have a minimum excess of £100 or more – you can ask if increasing it will reduce your premiums.

Not sure what level of cover or type of policy you need?

Contents insurance – choose the right policy and cover

Buildings insurance – how much cover do you need?

Where can you buy home insurance cover?

Insurance Premium Tax Rise

The Chancellor announced a rise in Insurance Premium Tax from 9.5% to 10% in his Budget 2016.

  • Comparison sites. Around eight out of ten people use these to search the market for the cheapest home insurance quote. If you use at least two sites you’ll see many of the best options, but each site has pros and cons. The Money Saving Expert website guides you step-by-step through which comparison sites to use.
  • Other insurance companies. Some insurance companies don’t feature on comparison sites. You may find that these offer better cover at a cheaper price, so make sure you check them out as well. The Money Saving Expert websiteopens in new window highlights who these companies are.
  • Insurance brokers. A broker might be able to find you the right policy at a great price – if you need to find non-standard home insurance (for example, if your home is a listed building, it’s not built in a standard way or is in an area prone to flooding) brokers can do all the shopping around for you. They can find a policy that best suits your needs and even act for you if you need to make a claim.
  • Your mortgage provider. When you take out a mortgage you will often be offered buildings and contents insurance at the same time. Don’t accept right away – shop around to make sure you’re getting the best deal.
  • Banks, card providers, supermarkets and retailers. It doesn’t have to be an insurance company – lots of other companies offer home insurance. Many of these will appear on comparison sites.

How to reduce the cost of home insurance

  • Increase security. You might get a reduction for joining your local Neighbourhood Watch scheme and installing security lighting. Some insurers will only insure you if you have BSI approved locks on all outside doors and windows.
  • Install alarms. Smoke and burglar alarms are both important. Make sure they’re approved models – a NACOSS alarm (National Approvals Council for Security Systems) could earn you a discount of up to 7.5% on your premiums (although what you save in lower premiums is unlikely to cover the cost of the alarm).
  • Increase the excess on your policy – If you are happy to cover a bit more of the cost of a claim yourself, your premiums may be lowered.
  • Build your no-claims discount. If you don’t claim for a few years you might get a discount, but not all companies offer this, so check before you buy.
  • Buy buildings and contents insurance together. You might get a discount if you get both from the same company. Also, if there’s a fire, or something else that affects both the building and your possessions, it may be less hassle if it’s all managed by the same insurer.
  • Pay annually. Monthly premiums can cost more – there’s usually an extra 6% charge to pay. Though some insurers will allow payment by instalments for no extra charges so it’s worth shopping around.
  • Take advantage of offers. Some insurers guarantee to beat any quote (or the renewal of your current policy) by up to 10%, on a like-for-like basis.

Sadly, there are some things you can’t change – your postcode is one of them. If you live in a high claim area (at risk from theft, flood, or subsidence) you’ll have higher premiums.

Remember, if you don’t take reasonable care to answer truthfully and accurately when buying the policy, any claim you make might not be valid.

Cancelling your home insurance

You can cancel your home insurance any time within the first 14 days – this is the cooling off period that all insurance companies must give, according to the rules of the Financial Conduct Authority. But there might be a penalty. A lot of people don’t realise this when they buy, but many insurers charge a fee for cancelling within the 14 days. However, this fee should only reflect the cost of the service that you’ve received. They also deduct the days of cover you’ve already had before giving you a refund.

If you cancel after the 14-day cooling off period you may not get the full amount of money back for the days of cover you haven’t used yet.

Cancellation terms and conditions vary by policy – always read the terms and conditions of your policy and any exclusions before you buy.