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Buying home insurance: beware the pitfalls

If your house is damaged or destroyed, then buildings insurance should cover the cost of repair or even rebuilding it. When you purchase your home, responsible lenders will insist that you take out buildings insurance as a condition of your mortgage and It is unlikely that you would be accepted for a mortgagewithout it. The therefore need to consider:

(1) • What risks should you look for when you buy building insurance?
(2) • What are the advantages and disadvantages of switching insurers, particularly if there is a possibility of future claims?
(3) • How can you protect against having to make a claim?

Which risks should you look out for?

When you shop around for a new buildings insurance policy, you may be tempted by price. But it is important to know what risks may or may not be covered under the policy and compare the levels of cover policies offer. Whichever insurer you choose, your buildings insurance should cover the full cost of rebuilding your house, including demolition, site clearance and architects’ fees. A good buildings insurance policy should insure your property against the risks of loss or damage caused by:

(a) • Fallen trees, lampposts, aerials or satellite dishes;
(b) • Fire, explosion, storms, floods, earthquakes;
(c) • Frozen and burst pipes;
(d) • Subsidence;
(e) • Theft, attempted theft and vandalism;
(f) • Vehicle or aircraft collisions.

Switching insurers brings advantages - and disadvantages
Advantages: saving money and finding the cheapest buildings insurance policy appeals to many people. With thousands of insurers and attractive websites advertising for your custom, there is a wealth of information available for you to compare the key details of each policy. Whilst regularly switching in pursuit of the cheapest deal can save you money, it does have its disadvantages though.

Disadvantages: a key one is that repeatedly changing insurer can put a ‘mark’ against your name with insurance companies. Insurers carry out many background checks on potential clients, to ensure that insurance claims are not fraudulent and policyholders have supplied accurate and truthful information. Many European insurers have fraud management systems in place and share details about policies, policyholders and claims. If you repeatedly change insurers, and then, even worse, make claims, this behavior may reduce the range of insurance policies available to you.

You may also find complications if you make a claim for a problem that may have been long standing, such as subsidence, tree or drains damage. Disputes over which insurer, if any, is responsible for meeting the costs of a claim in these circumstances are best avoided.

Try to avoid making claims

Whilst you cannot prevent accidents occurring, there are some things you can do to reduce the likelihood of having to make a claim on your household insurance policy, such as:

• General Maintenance – Ensure that any ‘problems’ that require repair, replacement or renewal are carried out as soon as possible. Prevention is better than cure and avoidable or unnecessary insurance claims can increase your annual premium.
• Trees – If you have trees on your property, then seek expert advice from tree surgeons about maintaining them, so they do not damage your property.
• Frost damage is often predictable, and usually preventable. Make sure that pipes are well lagged and don't leave your house unheated for too long during cold spells. A burst water tank and destroy a home and it's contents very quickly, and you won't want any quibbles with an insurer which claims that you were negligent in not taking simple precautions.

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