Property Insurance Q&A

You must be careful with this – make sure that you do not insure your buildings for the market value of your property. You are insuring against the fact that the building may have to be demolished, the site cleared and then your property rebuilt. You won’t have to buy the land again, so as a result the rebuild cost is typically much lower than the market value. If you insure for the market value you are wasting your money by  over insuring yourself!
More information on rebuild costs can be found from the Association of British Insurer website

You would be wasting your money, by lying on the proposal form you would invalidate the contract between the insurer and yourself, so no part of the policy would be valid. This also means that if you have a mortgage on your property you are probably breaching your mortgage lender’s terms and conditions by not having insurance in place.

IPT means Insurance Premium Tax. This is levied on insurance policies sold in the UK.

In order to buy insurance you must have an ‘insurable interest’, basically you have to own whatever it is you are trying to insure. In this case if you rent your accommodation you will not, in most circumstances, own the building. As a result you cannot insure it, you can only insure your own personal belongings within the building.

Insurers will apply a clause in your policy called average. Essentially this means that if you insured your contents for £20,000 and they were actually worth £30,000, you are underinsured by 1/3. As a result if you put in a claim for £10,000 the insurers would only have to pay you 2/3 of the claim (assuming it was valid etc.), therefore you would receive a claims settlement of £6,666, not the £10,000. As a result it is important that you insure for the correct amount. Underinsuring will result in any claims being restricted on their pay-out. This clause is very common in domestic policies, but not many people actually know about it so please heed this warning…

Your house contents are anything that you could reasonably take with you, if you moved – your bathroom suite wouldn’t be considered to be your household contents for example. Another way of thinking about it is to imagine picking up your house and shaking it – everything that would fall out is considered to be your contents.

New for Old means that the insurance company will replace the item you are claiming for with a brand new one of the same make and specification.

This can be considered as jewellery, articles containing gold, silver or other precious metals, cameras, binoculars, watches, furs, paintings and other works of art, collections of stamps, coins and medals.

Legal cover is not usually compulsory on home insurance, but this can provide you with legal assistance for personal injury cover and consumer disputes.  So for example, if you walked past a building site and were hit by a brick, the insurance company could pursue a claim on your behalf against the building company for personal injury.

This information would be available on your Policy Schedule and the amount can be selected prior to application.

Your contents, personal effects, fine art, antiques, jewellery and watches are insured against loss or damage – including accidental damage – while you’re at home or anywhere in the world.

Personal effects are property used for domestic purposes or for occasional business use. You or your family should either own them or be legally responsible for them.

They can include:

  • Clothing, including motorcycling suits, furs, glasses, contact lenses and hearing aids, baggage and other items carried about the person,
  • Photographic equipment, mobile phones, electronic equipment, sports equipment and bicycles, musical instruments