Savvy Money: Checking the small print on insurance is a good policy

When it comes to renewing your home cover, ensure it actually offers what you may need

If you live where flooding is possible, it is important your insurer will pay for alternative accommodation (Getty Images)

If I say the words "renewing your insurance" to you, what's your reaction? Long sighs? Rolling your eyes? Either way, it's hardly the kind of task that puts a spring in your step.

Before the advent of price-comparison sites, most of us faithfully renewed with our existing insurer, hoping that loyalty paid (it didn't). These days, you probably do a quick whizz around a comparison site – or two – and pick a policy on price. But do you know what cover you're actually getting?

You only really find out how good your insurance is when you come to make a claim – if you don't read the small print before you sign up, you may find you don't have the cover you need. Here are some clauses it's worth checking for:

Trace and access

You may never have heard of "trace and access", but it could make a big difference to a claim payout. Trace and access (sometimes called "seek and find") is designed to pay the cost of finding the source of the problem. So if you're claiming because a leak has damaged your kitchen floor, for example, a policy with trace and access will cover the cost of finding the leak, not just the resulting damage. And as that could involve ripping out your kitchen units or even digging up your floor, it could be expensive.

SavvyMoney Tip: Try and get a policy with at least £5,000 of trace and access cover. Anything below this may not be enough.

Matching items

When is a suite of furniture not a set? Err, when your insurer says so. Some insurers will only replace one item that's damaged, even if it's from a set and you can't find a matching replacement. If you don't want to live with a mismatched sofa and chairs after you've claimed, check the policy's matching items cover. Some insurers will replace all items if you can't find a matching one or the line has been discontinued.

SavvyMoney Tip: Some policies let you add matching items cover for a fee if it's not included as standard.

Alternative accommodation

If your house is damaged by a fire or flood and you have to move while it's repaired, it could be months before you get back in. So you should make sure you have a reasonable level of alternative accommodation cover.

SavvyMoney Tip: Some policies have quite low limits on alternative accommodation cover (such as £15,000 or 20 per cent of the sum insured, whichever is lower). See if you can increase it or choose another policy.

Payment by vouchers

An increasing number of insurance companies are paying claims by vouchers or prepaid cards, rather than giving you a cheque or replacing everything for you. The advantage of vouchers (for insurers) is that they get a discount from the retailers you can spend them in and the advantage for policyholders is you don't have to spend them on exactly the same item for which you're claiming. The downside is you may feel a bit aggrieved if you've been given a voucher for a high-street jeweller when you're trying to replace an antique piece.

Some insurers give customers the choice of a voucher or cash, while others use vouchers as a preferred option. But they can't force you to use them in all circumstances. If you can't replace what you've lost on a like-for-like basis using the voucher or prepaid card, you should be offered cash of the same value, or a replacement.

SavvyMoney Tip: If you do a keyword search on "suppliers" on the policy PDF, you can normally find out if the insurer will let you choose or if it will decide how your claim is paid. You're entitled to a cash settlement if you can't replace the item you're claiming for with a voucher.

Verdict

Shopping around for insurance is definitely a good idea. But don't be tempted to go for the cheapest without checking what you're getting. You should be prepared to read the policy documents before you sign up and check with the insurer (and get their response by email, don't just rely on a phone call) unless you get a broker to do the legwork for you.

savvywoman.co.uk