The art of insuring a home move

If you're moving house this spring, take care not to fall through any insurance gaps, writes Laura Howard

Spring house-moving season is officially under way. With the clocks sprung forward and the weather supposedly getting warmer, evenings are lighter and more conducive to after-work viewings. In April last year, for example, estate agent branches reported an average of 10 sales, according to the National Association of Estate Agents, compared with just six in the January.

As anyone who has ever moved will testify, the process is stressful and exhausting – and that's if it goes smoothly. But things do go wrong too, which is why it's important to be aware of the insurance implications a new home will bring, including the process of getting there.

The first thing to note is that you will become solely responsible for the bricks and mortar of your new home at the point of exchange (when you sign the contracts), not completion (when you are handed the keys). The window between these two dates can run into weeks, so it's crucial to be fully covered in the – albeit unlikely – event that your home burns to the ground or is battered by severe weather.

Buildings insurance is priced on how much your new home will cost to rebuild rather than how much you paid for it (much of the latter is accounted for in the land). The rebuild cost can usually be found in your survey or mortgage lender's valuation. Or, you can check it online at calculator.bcis.co.uk.

"Rebuild costs vary considerably according to the size and type of home," says Malcolm Tarling at the Association of British Insurers (ABI).

The average repair cost to homes damaged in the 2007 floods was £20,000 to £30,000, according to a report published earlier this year by the Environment Agency. So failing to get adequate buildings cover in place on time is a high-risk strategy. Especially as mortgages are payable whether your new home is habitable or not.

Putting all your worldly belongings in transit to your new property is also risky without the right insurance – but the definition of this can be confusing. Most standard contents insurance policies – as long as they are bought on an "all risks" basis – offer cover for "items carried outside the home". But, according to the ABI, this is usually capped at 10 per cent of the total contents insured, so £5,000 for £50,000 worth of cover. It also imposes a "single item limit", typically around £1,000, meaning this is the maximum you can claim on the loss or theft of a £5,000 watch, for example. Finally, you need to be with your belongings in person for the cover to apply.

But when you are transporting all your contents with a removal firm, you must check your existing policy offers separate cover known as "items in transit". Not all do, warns John Miles of comparison website, GoCompare.com: "Some [insurers] offer ample cover for a home move while others have stripped it out of the policy. You will need to check the policy wording carefully and call your insurer well in advance of the move to establish your exact position."

Halifax Home Insurance, for example, provides unlimited cover for loss or damage of contents while moving home to another permanent UK address – so long as you have employed a professional removal firm. But policy-holders with More Than will need to add on "contents outside the home". Only then will they be covered for all belongings outside the property – and while in transit – and, again, only if the move is handled by professionals.

If your insurer does not offer items in transit cover, you will need to make alternative arrangements, such as with your removal firm. Even if it does, this avenue can make the most sense, says Lyndsey Daykin at Pickfords removals. "As Pickfords' 'goods in transit' insurance is short-term cover designed for people moving home, there is no excess to pay. Also, if you claim on your home contents insurance, your premium may increase at renewal."

Insurance won't come as part of the overall removals package though. The one-off premium will be charged as a percentage of the quoted removal cost, which will depend on the declared value of your goods.

If you need to put your contents into storage, terms and conditions of home insurance policies will also vary. Halifax provides cover for contents held in storage for up to 72 hours during transit, but other providers won't offer cover at all. Firms such as The Big Yellow Self Storage Company provide stand-alone insurance but, again, this will be charged separately and based on the total value of goods stored.

Once your contents have arrived at your new residence, home insurance implications will change again. "It's imperative to inform your insurer when you are moving home to maintain cover, as it will be based on completely different criteria," warns Mr Tarling. "If you are moving from a rural home to a city flat, say, there will be more chance of being burgled and your premium will rise to reflect this."

But updating your existing policy may not be the wisest move financially, says Mr Miles at GoCompare.com. "There are many more variables under home insurance than say, motor insurance, as more factors change – your postcode, type of home and perhaps even profession. This means that, while your current home insurance deal might represent the best value for one property, it might not for another."

But if you want to switch, it will cost you to leave your existing policy early. If you are paying by monthly direct debit, there may be a loading on your final payment, while if you have paid up front annually, a charge will be deducted from your rebate. And the earlier you leave in the 12-month policy term, the more expensive it will be.

A new home can often also mean additional new belongings, so ensure your level of contents cover is realistic, says Darren Black, the head of home insurance at Confused.com: "The introduction of modern technologies in the home has sent the average value of contents soaring by 115 per cent over the past 15 years, according to our research. But underinsurance is still a massive problem, with up to 79 per cent of these contents overlooked."

Confused.com has recently launched an iPhone application called Home Calc; this allows users to log their contents on a centralised portal, helping them establish a true picture of the worth of their belongings.