Fairly or not, the insurance industry has a reputation for not paying claims. Our financial services partner, Lloyd & Whyte, offers some useful guidance and tips to help ensure you get the right answer from your Home insurer when you need to claim.
Lack of time is often the biggest contributing factor to a claim being turned down. Busy professionals are often drawn to online quote engines, which are designed to make buying insurance straightforward.
However, they have arguably given many policy holders a false sense of security.
On the face of it, the quote they select may seem like the best deal – a good price and all the headline covers you would want – but behind the common features such as Accidental Damage and Legal Expenses, policies can vary massively from one insurer to the next.
This often results in the purchase of a policy that simply hasn't been properly researched. It's only by taking the time to read through the seemingly endless pages of policy documents, that the true suitability of the contract can be established.
The best way to ensure you have the right cover, as well as a fair price, is to seek professional advice - as a BDA member, Lloyd & Whyte offer advice to dentists on this, and a range of other insurance products, just give us a call 01823 250700 or email firstname.lastname@example.org
Four top tips for purchasing your home insurance
Insurance is a contract between you and your insurer. As a policyholder, it is your responsibility to tell your insurer about anything that might affect the contract.
This may seem obvious, but all too often policyholders innocently fail to or inaccurately disclose something that the insurer considers to be a material fact. Common facts that are overlooked or misrepresented include:
- The total value of your contents and/or valuables - this must reflect the full replacement cost of all the items in your house (including those you wouldn't actually replace)
- The number of bedrooms – even if you don't use a particular room as a bedroom, if it could be seen as one, it must be declared
- Security – if you're unsure what locks you have, don't guess, find out or say you don't know
- Having a tenant or lodger - any paying guest must be declared, even if it's friend of the family
- Having work done on the house – you must tell your insurer before it commences
- Past claims – make sure you give the correct date and value of any past claims, don't guess-timate!
When applying for any type of insurance, never guess answers to questions or approximate information, facts are important.
2. Failing to comply with a condition
All contracts have terms and conditions, insurance is no exception. Breaking with those terms and conditions can invalidate your insurance.
It is important to read all your documents, including the Policy Wording, to check for clauses that may apply and to make sure that you adhere to them.
Examples of clauses that may apply:
- Alarms – if your insurer has given a discount for having an alarm, there may be a requirement to set it every time you leave the house
- Locking windows at night – you may have to do this in unoccupied rooms, even though you are in the house
- Flat roof – you may be obligated to get it regularly inspected
- Jewellery inspection – you might have to get the settings of stones checked regularly
- Valuations – specified items of jewellery will require regular valuations
- Safe – if you have more than a certain value of high-risk items, your insurer may require that you keep them in a safe
Failing to comply with policy terms will likely lead to a claim being declined. When buying your insurance through a professional adviser, they will make a point of highlighting any unusual or specific requirements and clauses such as these.
Underinsurance is one of the main reasons you may not get as much as you anticipate. Policies require that you insure for 'full replacement value'.
- For Buildings, this is the full cost of reinstating the house as it currently stands, inclusive of all associated costs, such as architect's fees and clearance costs.
- For Contents, this is the total cost to replace all the items in your home, from carpets upwards, even those bits and pieces you would never bother replacing.
If you fail to insure the full value of your home or contents, you could fall foul of a clause typically referred to as 'Average', which a large percentage of home insurance contracts include.
This allows the insurer to make a proportionate reduction to any claim, equal to the rate of underinsurance, i.e. if you require £50,000 but insure for £40,000, the insurer could deduct 20% from any settlement.
Any money you saved on your premium could easily be eclipsed by the reduction applied.
In extreme cases of underinsurance, particularly if the correct amount of buildings, contents or valuables cover you require exceeds a level that your insurer would have agreed to had they been aware, your claim may be declined entirely.
Unlimited sums insured or policies with very high blanket-limits are one way to help reduce the risk of being underinsured and are becoming increasingly common.
However, it is still possible to be underinsured on this type of contract. Check the maximum number of bedrooms that are acceptable (make sure you declare all of yours) and be aware of the 'inner limits' that apply for valuables or high-risk items – if you exceed these limits make sure you declare this or it could invalidate the policy.
Cover for personal effects (also called 'personal belongings'), which protects items taken outside of the home, is another benefit that will have a specific limit, or could even be an optional extra. Make sure you have sufficient cover.
Single article limit: the valuables/high-risk, personal effects and bicycle sections of a policy will have a single article limit: this is the most the insurer will pay out for any one item. If you have any items that exceed these limits, they must be specified on the policy.
4. Check it's covered
A common reason claims are declined is because they're simply not covered by the policy.
Home insurance contracts and the benefits they provide can vary considerably. Aside from the typical features we all look for, such as Accidental Damage, Flood, Theft, Storm and Legal Expenses, there are a wide range of additional benefits available, some of which can be just as important as these headline covers.
Not all policies will include all benefits however. Examples of ancillary covers that could be optional or missing entirely include:
- Bicycles – some will cover bikes automatically, whereas others will only do so if you to take out a specific extension
- Accidental Damage/ 'Full' Accidental Damage – most policies will now include an element of Accidental Damage as standard, however there is typically a restriction on the type of item covered. Under the Buildings cover it is normally limited to fixed glass and sanitary wear and under the Contents, to Home Entertainment Equipment (note, this often doesn't incorporate laptops, tablets or mobiles). This means that dropped iPads, spillages on carpets or DIY mishaps would not be insured. To obtain wider cover for the rest of your home and its contents, an extension would need to be added for 'Full' Accidental Damage.
- Trace & Access cover - in the event of a leaking pipe, the resulting water damage should be included under most Buildings insurance policies. However, without Trace & Access cover, the potentially substantial costs of a plumber locating and accessing the leak, then reinstating any walls or floors necessarily damaged in the process, would not be insured.
- Alternative Accommodation – for significant incidents such as fires, floods or burst pipes, it isn't sufficient for your policy to simply cover the costs of repairs. You also need to be certain it will pay for you and your family to rent a suitable alternative property if you must vacate for a period – check this, the maximum amount the policy will pay and for how long, to ensure you could rent a comparable property.
Always check that any potential policy provides the cover you require and if you are in doubt that a particularly feature is included, ask the insurer directly.
Have you got the right cover?
If you are not confident that your insurer will cover all the things you need them to, then we advise you to seek professional advice as soon as possible.
BDA members are eligible to access advice and support from Lloyd & Whyte, as well as discounts on a number of bespoke products.
We also offer range of other services, including dental practice insurance, independent financial planning, fee-free mortgage advice, and services for new graduates, find out more.
Pete Lishman, Managing Director
Lloyd & Whyte
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