Avoid Excess-ive Home Insurance Premiums

CHESTER, England, February 23, 2012 /PRNewswire/ --

• Opting for a higher excess level on home insurance premiums may be a false economy , warns MoneySupermarket.com
  

Increasing the voluntary excess level on home insurance policies to reduce the cost of the premium may sometimes cost you more in the long run, according to MoneySupermarket.

Britain's number one comparison site analysed the cost of home insurance using a range of voluntary excess levels, from £0 to £500, to evaluate the effect on premium prices. Overall, the research showed a difference of around £190 to the annual cost of a premium when comparing the average cost of a £0 excess (£366) to a £500 excess (£176)^[1], but this saving could end up being an expensive decision if you need to find £500 should you need to make a claim.

The research also found premiums reduce marginally when comparing £100 excess to £300 - a £15 difference - and furthermore, when opting for a £400 excess, it will actually hike the premium back up to £205 a year - a six per cent increase!

Peter Harrison, insurance expert at MoneySupermarket,  said: "It can be a real balancing act when looking at ways to reduce the amount you spend on household insurances whilst still getting the right cover for your needs.  Our research shows upping the voluntary excess level on your home insurance premium might not always save you the money you would expect and is something to think about when looking for the best fit policy and price.

"It is important to set your voluntary excess at a level you can afford in addition to any compulsory excesses the insurer might require you to pay. It's clear that choosing £0 excess is not looked on favourably by insurers and they set their premium prices accordingly. It is worth having some voluntary excess to keep annual cover costs down.

"You have to bear in mind that the excess amount you choose will need to be paid before you can access any other money from your insurer should you need to make a claim, be realistic when deciding if opting for an extra £100 is worth a much smaller upfront saving. Comparing prices and policy details is the best way to get home insurance cover at the best possible price. Customers who use MoneySupermarket to shop for home insurance save on average £126.*

MoneySupermarket.com's top tips for cheaper home insurance premiums:

• Shop around and don't accept your renewal quote - Shopping around for your home insurance rather than accepting your renewal premium will save money - customers who shop through MoneySupermarket save up to £230.
• Think about your cover - Do you really need accidental damage cover? This can increase premiums by 25%. Think carefully about the add-ons you need.
• Don't claim unless you need to - The fewer the claims, the higher your no claims discount. So for minor issues that would be inexpensive for you to cover with your own cash, think twice before making a claim.
• Install a good home security system - Sometimes there are alarm systems that might be preferred by an insurer. The NACOSS standard alarm can cut premiums with some companies by 7.5%.
• Join a 'Neighbourhood Watch' campaign - this can help to reduce your premium if you inform the home insurance company of your participation in a scheme. It can reduce your premiums by up to 5%.
• Fire - Fit a smoke alarm and take simple steps to avoid accidents. Most fires in the home are caused by smoking or cooking; never smoke in bed, don't leave cigarettes lying around and don't leave cooking unattended. Other fire tips include closing doors at night to contain fires, check the home is safe before going to bed and keep matches away from children.
• Don't smoke - As covered above, the fire risk greatly increases if you smoke cigarettes. Most insurers will now ask if you are a smoker.

Notes to editors:

1. Cost of building and contents insurance

             Premium   Premium   Premium   Premium   Premium   Premium   Premium
             Excess    Excess    Excess    Excess    Excess    Excess    Excess
              GBP0     GBP100    GBP200    GBP250    GBP300    GBP400    GBP500
    1       GBP200.34 GBP157.94 GBP149.46 GBP151.58 GBP149.23 GBP151.58 GBP143.81
    2       GBP266.06 GBP174.32 GBP159.50 GBP156.69 GBP151.58 GBP188.68 GBP151.58
    3       GBP296.80 GBP183.70 GBP169.04 GBP166.05 GBP178.00 GBP196.17 GBP152.39
    4       GBP308.46 GBP197.37 GBP199.28 GBP177.58 GBP190.80 GBP200.38 GBP184.50
    5       GBP349.60 GBP220.48 GBP208.98 GBP192.92 GBP202.37 GBP200.56 GBP157.62
    6       GBP407.04 GBP223.81 GBP221.54 GBP206.48 GBP207.86 GBP202.64 GBP188.70
    7       GBP548.33 GBP224.46 GBP222.60 GBP212.65 GBP210.88 GBP213.06 GBP189.86
    8       GBP557.56 GBP225.75 GBP224.90 GBP213.87 GBP212.18 GBP213.95 GBP191.96
    9          N/A    GBP232.14 GBP232.14 GBP217.20 GBP213.32 GBP222.60 GBP199.57
    10         N/A    GBP241.58 GBP233.65 GBP217.51 GBP218.36 GBP256.95 GBP202.71
    Average GBP366.77 GBP208.16 GBP202.11 GBP191.25 GBP193.46 GBP204.66 GBP176.27

Sourced by http://www.moneysupermarket.com 01.02.2012

Annual cost to cover a three-bedroom semi with min £40,000 contents

Manchester M20

Market Value = £360,000

Rebuild Value = £210,000

*Based on online independent research by Consumer Intelligence during 01 January 2012 to 31 January 2012

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SOURCE moneysupermarket.com