Your home insurance premium can get complicated, that’s a fact! As consumers, we’ve all been left confused when inspecting our latest premium renewal, as we ask, “How did they arrive at that figure?”
When calculating your premium, insurers take several factors into consideration. So how can we take steps to lower our premium and what should issues should we take into account around the house or local area?
Harris Balcombe, a UK leading claim recovery specialist explains what affects your home insurance:
1. Where in the world are you?
Flooding is a hot topic and as last winter’s catastrophic floods made clear, some homes are at a higher risk of the natural disaster than others.
So it should come as no surprise that homes located on flood plains generally pay higher insurance premiums. Take a look at the UK flood map from the Environment Agency to find out whether your home is at risk. You can even take a detailed look at your street to assess the risk and look up previous flooding incidents. You may also be able to get cheaper home insurance introduced as a part of Flood Re.
2. The fracking effect
Few issues have divided the UK more than fracking. While many of us understand the effect natural disasters can have on our home and consequently our premiums, it’s also important to look at the effect of fracking too.
Fracking – or hydraulic fracturing – involves blasting wells with water and chemicals to extract shale gas for use in energy production. There are fears that the practice could contribute to ground subsidence, that it could encourage earthquakes, and that the chemicals used in the process could affect local water supplies.
You may already be covered for the harmful effects of fracking, as many home insurance policies already cover for ground movement that’s beyond your control.
However, this is something that you should check as a premium priority. Many insurers are taking a “wait and see “ approach to the long-term effects of fracking on insurance premiums. Why not get a head-start by checking government plans for fracking and see if your local area is included?
3. Safe as houses?
Remember the days of keeping money under your mattress? Well, In the wake of the global financial crisis, many homeowners are withdrawing large chunks of their savings and storing them in a safe.
As a rule of thumb, insurers don’t like this idea. In fact, many home contents insurance providers advise against storing large amounts of money in the home. Though home insurance policies do account for cash, they’re mainly concerned with “loose change” as opposed to stacks of bills, or to amounts of up to £500.
Unfortunately, the more money you have secured away, the higher the premium you’ll be expected to pay.
4. Your home and your business?
The specific way you use your home can directly influence your home insurance premium.
For example, if you work from home, there’s a range of factors you’ll have to take into consideration. Unless you want to invalidate your home contents policy, you’ll have to tell your insurer that you’re working remotely.
Depending on the nature of your remote work, you might have to consider a few add-ons to your home insurance policy. If you regularly invite clients into your home, you may even need to add public liability insurance.
Many homeowners are now turning to services such as Airbnb to make a bit of cash on the side. It should go without saying that regularly welcoming members of the public into your home will affect your insurance premium.
Sound, premium advice
Premiums are a fact of life, no matter what you are wanting to insure. While It is important to shop around for the best deals before your renewal (there are plenty of insurance companies on insurance comparison sites, but be careful not all companies are listed there, e.g Direct Line or Aviva aren’t), there are a few pitfalls to look out for that have considerable effects on the amount you pay. If you’re concerned, speak to your insurer, highlight any issues and always check the small print.