Mrs O telephoned me in a bit of a panic last week. She had been insured with a well know organisation specialising in providing products and services for the over fifties, including home insurance, for many years without any problems. Her renewal invitation had just arrived and there was now a major problem, not of her making.
When she took the policy out several years before she was asked to declare when the property was built, choosing from a small range of options. The most appropriate to her circumstances was that her home was built pre 1920 but no further questions were asked. This year the insurance company underwriting this particular home insurance scheme had changed, and now they were asking more questions:
“Is your home a listed property?”
“ Yes, it is Grade II listed dating from the 16th century but is, in the main of standard construction apart a couple of timber framed rooms upstairs”
“In that case, we are going have to re rate your renewal premium accordingly”
Mrs O had been paying a little under £700 and was hoping for just a small increase in light of this “new” information, which was not new at all and readily available. Astonishingly, even to me let alone Mrs O, the renewal premium was increase to over £1,500, an incredible increase of over 100% for no reason other that the property was a listed building. In Mrs O’s own words, “they clearly didn’t want me anymore”.
Fortunately, Dovetail Insurance Services were able to source her quotation with a specialist home insurance provider, who understood the risks of owning a listed property. The quotation was just a little more than Mrs O was paying and her problem was solved.
I thought that this might be a one off unique situation but a few days later I received a call from Mr V who was in a similar position. The same organisation, the same questions and then an increase in the renewal premium from £600 to £1,000. Once again, I was able to source a quotation for both the buildings and contents insurance, not of particularly high value or with items of fine art, antiques or a collection, for £650. More importantly for Mr V, and indeed Mrs O, was that their insurance provider was fully aware that their home was Grade II listed and all the implications that may imply if dealing with a major home insurance claim.
Once again I am reminded by these stories that if your home or its contents are unique, either because they are high value or a listed property, the well known brand names in the home insurance world are, in the main, not equipped or in most cases willing to provide suitable home insurance cover. It is worth speaking to a specialist high value home insurance broker who will, at least, listen to what you have to say.
It has been an interesting week for me both in speaking with new clients and finding them solutions for their home insurance. Here are two examples of how I have been able to help source contents insurance, plus buildings in both cases, which has a high value element, whether a collection or a single item.
“Hi Geoff, This looks good. Thanks for getting a range of quotes – impressive given
my own lack of results”.
Mr B lives in a normal family home and has a passion for collecting coins. Up until now, however, he has had to keep his valuable collection in a bank safety deposit because he could find no home insurance company willing to add the collection for cover whilst at home. He had spoken to many well known home insurers, the ones that advertise on television and in magazines, but all flatly refused to accommodate him. The value of the collection was more than they were willing to insure.
Mr B was willing to install an appropriate safe, even upgrade his alarm if necessary but still the answer was “no”. Then he called me and after a few minutes to discuss his needs I was able to source four quotations from specialist high value home insurers, all at a reasonable annual premium though it was, of course, more than the basic home insurance policy that he currently had. He is now able to have his collection at home and enjoy whenever he feels the need.
Mrs and Mrs H have a passion for astronomy and have an expensive telescope in their garden housed in a purpose built observatory. They also have a couple of nice pieces of jewellery but nothing too expensive. They have a standard home insurance policy with one of the well known companies but adding the telescope was beyond the comprehension of the person in the call centre. Many calls to other insurers due the same blank. As Mrs H said to me, if you cannot tick all the boxes “yes” and have something slightly unusual they just do not want to know, or even if they say they will cover it, the documentation showing this leaves a lot to be desired.
Needless to say this is a very straightforward risk to accommodate. What it needs is an insurer that is prepared to think differently and listen to what the client and myself have to say. The specialist home insurers, which tend to cater for high value homes, do just that. But as these two examples highlight, it is not always the million pound buildings that have complex insurance risks, which need a bit of lateral thinking. They understand this and through my relationship with them are willing to listen, invariably offering very fair terms.
So, if you have something out of the ordinary, that needs to be included on a home insurance, preferably buildings and contents together to get the best possible terms, it is worth giving me a call on 01242 699113.
It is very important to have a buildings sum insured (the amount a home insurer will pay to re – build your home) that adequately reflects the full and total costs to do so.
This not only includes the cost of building materials and the labour required but also the cost of clearing the site, including demolition, and fees incurred from architects, surveyors, consulting engineers and other legal costs.
A very common mis conception amongst home owners is the current market value is a reflection of the re buildings costs of your home. In reality, the two have very little to correlate them and there is no recognisable guide or formula to get from one to the other.
In most normal circumstances, the market value will be higher than the true re buildings costs of your home, so by using the market value you are likely to be buying more home buildings insurance cover than you need. This is, of course, better in the event of a catastrophic event than under insuring your home, the latter which can compound an already disastrous circumstance, but it also probably means that you will be paying more for your buildings insurance than you actually need.
You can obtain the re building cost of your property by a number of ways, which include the following:
1. If you have a mortgage, the surveyor commissioned whether by your self or on behalf of the lender is very likely to have calculated the “figure for insurance purposes”. This may now be a few years old, depending on when you bought the property, but if it is within a few years you can use it as a base starting point from which you can index link on a compound basis for each year since the purchase
2. You can commission now a suitably qualified chartered surveyor to visit your home for the sole purposes of calculating accurately the re building cost of your home. You will find a suitable such professional local to you on the Royal Institute of Chartered Surveyor’s website (www.ricsfirms.com)
3. You can do the calculation your self. This is not recommended but there are guidelines available although not suitable for all types of homes. I will cover this in the next blog
4. Some of the high value home insurance companies will commission a suitable professional to do this at their own cost. There is usually a qualification for this based on the size (sum insured) of your home or the premium that you pay
A final word for today, whatever you do, do not try to cut insurance costs by buying home buildings insurance cover below what you actually need. It is your most valuable asset, your home and your future at risk.
This is the basic question one should ask oneself before seeking insurance quotations for your home and its contents. Indeed, it is one that the Financial Services Authority (www.fsa.gov.uk) requires any home insurance intermediary, such as Dovetail Insurance Services Ltd, to actively participate with you, the consumer, to identify that the home insurance policy you buy is suitable to your circumstances. It is important that you are sold a home insurance policy that is neither inadequate or in some extreme cases, totally inappropriate.
Over a series of articles I will go into greater detail of what you should consider and what may be on offer to you, but for now let us look at the basics.
As a home owner, a catastrophic event, which is fortunately quite rare but a possibility nonetheless, that completely destroys your home or renders it uninhabitable is the worse case scenario. Typically, this might be a fire, an event that all home insurance policies should cover.
Whilst unlikely, it serves as our starting point as you would have completely lost the home you live in and all its contents. Should you not have home insurance cover, this effectively makes you homeless with no financial back up from which to start again. This is a scenario that most of us would not care to dwell upon too long. So we will not!
The very basic need of your home insurance policy is that it should enable your home to be completely re built, having been demolished if necessary to clear the site, and then re furnished to the standard that you experience prior to the insured event.
To do this you need to have adequate cover, which is referred to as the “sums insured” for both buildings and contents. In respect of buildings this should be the re-building cost, and not the market value if sold which can be very different, and the full replacement, usually “as new” for most modern home insurance policies, in respect of the contents. To under insure, whether knowingly or not, can leave you seriously out of pocket and in extreme cases invalidate the policy entirely.
To conclude, your starting point to assess your basic home insurance need is
a) How much would it cost to re build my home ?
b) What is the total value, as new, for all the contents of my home?
And if you excuse the pun, you now have the foundation on which to build the specific needs and requirements that I will look at in more detail.