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Five questions about ... home insurance

 

Clare Francis
Monday 24 October 2011 23:52 BST
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The average price paid for home insurance has fallen to its lowest levels in at least a decade, according to the Association of British Insurers (Joe Giddens/PA)
The average price paid for home insurance has fallen to its lowest levels in at least a decade, according to the Association of British Insurers (Joe Giddens/PA) (PA Archive)

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What are the types? There are two main types. Buildings insurance will cover the cost of repairing or rebuilding your property if it is damaged. Contents insurance covers your personal possessions, including furniture, clothes and carpets.

Why do I need insurance?

If you have a mortgage, buildings insurance is compulsory. However, owners of leasehold properties, such as flats, should not have to worry about buildings cover as it is the freeholder's responsibility. Contents insurance is not compulsory, whether you own or rent. However, if the worst happens and your home and its contents are destroyed having insurance could save you from ruin.

Are premiums still rising?

Home insurance premiums have been increasing steadily.

However, according to the latest figures from MoneySupermarket, typical premiums actually fell by 0.4% over the last year or so. But people living in certain areas of the country are still being hit with premium rises.

How are premiums set?

Your postcode can affect how much you pay. If your home is classified as being in a "high-risk" area – whether for flooding or fraudulent claims – it will be ref-lected in your premiums.

How can I reduce costs?

The best way is to shop around using a comparison website.

Other top tips include installing a good home security system and increasing the excess you pay towards any potential claims.

Clare Frances is editor of Moneysupermarket.com

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