According to the Money Saving Expert in a post dated March 2017, home insurance premiums may be escalating by as much as 8% for building insurance and 4% for content insurance. The combined increased on a typical home building and contents insurance policy is therefore an estimated average of 4.4%.
Yet again, this raises the importance of checking very carefully the renewal notice on your home or, if you are a tenant, your contents insurance, with particular scrutiny.
Nothing in the world stands still. Everything changes. And that also applies to the home you own or the contents of the accommodation you rent.
Just as those changes affect your circumstances, so too do they change the nature and scope of the insurance you are likely to need:
- as a home owner or landlord, for instance, you might have commissioned major building works that increase the value of your property;
- the home owner or tenant who previously insured the contents of their home for a certain amount, might have made major purchases since the last insurance renewal that significantly changes the sums at risk.
A quite natural response to any renewal notice for your home insurance cover might be to let things stand as they are and accept the same level and scope of insurance that you had during the previous 12 months.
But that renewal notice is only capable of reflecting the circumstances that prevailed in the past and takes no account of the changes to your personal circumstances since then – reason enough for looking especially carefully at just what has changed and whether or not you need to change the basis of your cover.
The most critical, of course, is the total building sum insured – the maximum amount you are entitled to receive in the event of a worst case scenario in which you home is totally destroyed and needs to be rebuilt
Naturally, the cost of reconstructing your home – a cost that is quite different to any price you paid for it or its current market value – is likely to change from one year to the next.
You might still want to check whether that valuation reflects actual changes in the construction industry by using the construction cost calculator offered by the Association of British Insurers (ABI) or by engaging your own chartered surveyor or valuer for a professional estimate.
It is just as important to update the total contents sum insured, to reflect new items you might have bought or old items that have been sold or have reached the end of their useful economic life. In order to avoid the twin dangers of over or underinsurance, you might want to take a detailed room by room inventory of the current contents and their present value.
Although your insurance renewal notice may once again have an inbuilt and index linked increase in the value of those contents, a detailed valuation is likely to ensure that any loss or damage meets adequate compensation in the event of a claim.
In the case of your contents insurance, you might want to pay particular attention to whether the policy offers settlement on the basis of new for old replacement of lost or damaged items or whether it reflects any deduction for depreciation or normal wear and tear.
These are just some of the reasons for carefully reviewing the detail of any home insurance renewal notice you receive.