How to Budget for Home Insurance
Home insurance is one of those essential costs that homeowners have to budget for each and every year. There's no avoiding building cover and most people also choose to get contents insurance too. So how can you make sure that you've got the best cover to match your budget?
It's all well and good outlining how much money you have available to spend each month for various costs, but if you're not getting the best value then you might also not be getting the best service. In the case of home insurance, budgeting has to start by calculating cost.
If you've been living in a home for a number of years and have maintained the same insurer throughout, you should have a reasonably clear understanding of how much you'll need to pay at the end of the year. However, even in this situation, and with no claims discounts taken into account, you still might not have the best cover for the amount you're paying. You could be able to make your budget go further, or better still, save some money.
Fortunately the home insurance industry is far more transparent than it was in the past. Whilst you could perceivably call each provider and get a quote, in reality most people simply took the best price from their bank or building society. With the Internet, consumers now have the opportunity to shop around and see what else is available. So even if you are happy with your current insurer, there's nothing stopping you getting a few quotes from competitors to see how they match up.
This isn't just snooping for the sake of it; you can actually find that there are better offers to be had elsewhere. Therefore when it comes to renewing your cover, you will have some ammunition to get your insurance provider to lower their rates - or indeed, move elsewhere entirely.
Of course this is where most first time buyers have to start off. Whilst you may have had insurance for a previous rental home, getting your first policy for a new home will pose a number of problems.
First of all you have to work out exactly what you want to cover. A mortgage agreement will often stipulate that you have both buildings insurance and life cover before a sale can be finalised, therefore you need to get this secured early on. If you are strapped for cash at this point, the optional contents insurance might not seem as important. Indeed, if you don't have the money for it, then you can't get it.
However, it would be a mistake to think that contents cover simply wasn't needed. You should be budgeting to include some form of protection for your valuables, so that in the case of a natural disaster or fire, you won't be left thousands of pounds out of pocket.
You should get contents insurance that suits your needs. More often than not these needs will grow through the years as you amass more possessions of a higher value. Therefore your policy should grow with it, but start out at a suitably sensible rate. The benefit of this is that as your insurance level increases, the cost should stay level as you will get discounts each year for not claiming.
Therefore in order to get a better understanding of how to budget you first need to know what the cost will be and how much cover you require. A lot of factors can impact your buildings and contents insurance, so if you do need to save additional money, make sure there is nothing in your policy that might be artificially inflating the price you pay. By buying the right level of cover at the best possible price you will have a home insurance policy that provides great value and is easy to budget for.
It's all well and good outlining how much money you have available to spend each month for various costs, but if you're not getting the best value then you might also not be getting the best service. In the case of home insurance, budgeting has to start by calculating cost.
If you've been living in a home for a number of years and have maintained the same insurer throughout, you should have a reasonably clear understanding of how much you'll need to pay at the end of the year. However, even in this situation, and with no claims discounts taken into account, you still might not have the best cover for the amount you're paying. You could be able to make your budget go further, or better still, save some money.
Fortunately the home insurance industry is far more transparent than it was in the past. Whilst you could perceivably call each provider and get a quote, in reality most people simply took the best price from their bank or building society. With the Internet, consumers now have the opportunity to shop around and see what else is available. So even if you are happy with your current insurer, there's nothing stopping you getting a few quotes from competitors to see how they match up.
This isn't just snooping for the sake of it; you can actually find that there are better offers to be had elsewhere. Therefore when it comes to renewing your cover, you will have some ammunition to get your insurance provider to lower their rates - or indeed, move elsewhere entirely.
Of course this is where most first time buyers have to start off. Whilst you may have had insurance for a previous rental home, getting your first policy for a new home will pose a number of problems.
First of all you have to work out exactly what you want to cover. A mortgage agreement will often stipulate that you have both buildings insurance and life cover before a sale can be finalised, therefore you need to get this secured early on. If you are strapped for cash at this point, the optional contents insurance might not seem as important. Indeed, if you don't have the money for it, then you can't get it.
However, it would be a mistake to think that contents cover simply wasn't needed. You should be budgeting to include some form of protection for your valuables, so that in the case of a natural disaster or fire, you won't be left thousands of pounds out of pocket.
You should get contents insurance that suits your needs. More often than not these needs will grow through the years as you amass more possessions of a higher value. Therefore your policy should grow with it, but start out at a suitably sensible rate. The benefit of this is that as your insurance level increases, the cost should stay level as you will get discounts each year for not claiming.
Therefore in order to get a better understanding of how to budget you first need to know what the cost will be and how much cover you require. A lot of factors can impact your buildings and contents insurance, so if you do need to save additional money, make sure there is nothing in your policy that might be artificially inflating the price you pay. By buying the right level of cover at the best possible price you will have a home insurance policy that provides great value and is easy to budget for.