5 Home Insurance Myths Every Homeowner Needs to Know

When buying home insurance, there are a lot of misconceptions and areas that may cause confusion for homeowners.

According to the Financial Conduct Authority, on average, almost one in four home insurance claims (24%)* in the UK are dismissed.

Additionally, a colossal 82%* of homes in the UK suffer from underinsurance, where the insurance policy in place doesn’t cover everything needed. When a claim is made, this leaves insurers unable to pay for what isn’t protected under the policy.

This potentially shows a significant lack of knowledge about home insurance from first-time buyers and those who won’t have needed to make a claim whilst living in their current home.

We’ve pinpointed some common home insurance myths to debunk so you can understand your insurance better.

“Home Insurance Is Too Expensive!”

Between January and March this year, insurance premiums increased by an average of 3%* due to various causes. Two of the main factors include general inflation with the cost-of-living crisis and the cost of claims increasing.

With insurers having to pay more to settle a claim, they have two choices: increase their premiums or exit the market completely.

Although prices may seem higher than in recent years, they remain competitive in relation to the current financial climate.

Home insurance is essential to protect the biggest investment you’ll ever make – your home. The amount you pay per month is a drop in the ocean compared to what you may lose in the event of an unsuccessful claim.

Do your research and make sure you have the right insurance that perfectly fits your needs so your money is well spent.

“My Insurance Covers All Types of Damage.”

Although your insurance will protect a wide range of areas, it won’t always cover exactly everything you need right off the bat. Some forms of cover, such as Personal Possessions Cover, will be available as add-ons but not in your ‘standard’ policy.

With Source Home, you’re insured for risks such as, but not limited to:

• Escape of Water Excess
• Accidental Damage included with Standard Perils (Fixed glass, sanitary fixtures and ceramic hobs, underground pipes, tanks, and cables)
• Subsidence Excess
• Alternative accommodations and loss of rent
• Loss of Keys
• Personal Possessions

If you have any queries about your insurance and what’s covered, consult your adviser and read your policy document by signing in to your account here.

“I Don’t Need Home Insurance Once I’ve Paid Off My Mortgage.”

Even if your mortgage is paid off, you should always have household insurance to avoid any unfortunate mishaps that leave you at a financial disadvantage.

Unfortunately, most risks and damage will come without warning, which can be stressful for the homeowner. However, with a home insurance policy backing you, your home is safe from most things thrown at you.

Even though your home insurance isn’t bound by a mortgage, you should always put your safety first.

“My Insurer Will Pay Everything in the Event of a Claim.”

In 2023, the Association of British Insurers (ABI) revealed insurers paid £2.55bn in claims; a 10% rise from figures in 2022.

As stated earlier, checking your insurance is accurate needs to be done as soon as possible. If it isn’t, then your insurer will likely dismiss your claim, leaving you underinsured and unprotected.

It’s likely that if your claim is significant in size, your insurer will organise for a loss adjustor/loss assessor to view your home. They will calculate the repair costs, which will prompt your insurer to appoint a tradesperson or company to begin repairing your home.

Your insurer may alternatively send a bank transfer of funds or a cheque for the amount you’ve claimed for.

Most insurance policies come with an excess you must pay in the event of a claim. The higher the excess you agree to pay, the cheaper your premiums will be. You must pay your voluntary and compulsory excess before a claim can proceed.

It’s always best to gather as many details as possible before making a claim. The more equipped you are, the smoother the process will be. The more information, the better!

“I Don’t Need Home Insurance, or I Only Need the Bare Minimum.”

We can’t stress enough the importance of quality home insurance.

It’s all well and good to get a cheap insurance policy to find a mortgage, but you need to think further than that. A couple of extra quid a month to keep your home safe shouldn’t be a contest!

As of 2023, the Office for National Statistics (ONS)* stated there were 28.4 million households in the UK. Of these, it’s believed around 25% of these properties don’t have a form of insurance. That’s over 7 million people who may lose thousands in damages without protection!

Your insurance will cost you a small amount in comparison to what you could lose in the event of a claim, which is not only why having insurance is necessary, but why having comprehensive cover is just as important.

You can get in contact with us at Source to find the perfect home insurance policy that fits your needs via phone here – 029 20 265265. Read our other guides on our blog for more home insurance tips!

Conclusion

There are a lot of misconceptions about home insurance, which may cause unnecessary stress and overthinking for those looking for a policy.

This guide is the start of a series where we look at the common misinterpretations surrounding home protection. These will act as a helping hand to ensure you find the right home insurance that suits your needs and expectations.

References

• *Cost of Living: good and poor practice in the general insurance market (2023) Cost of Living: good and poor practice in the general insurance market – July 2023, Financial Conduct Authority. Available at https://www.fca.org.uk/publications/good-and-poor-practice/cost-living-good-and-poor-practice-general-insurance-market

• *Sandison, E. (2023) Rebuild cost gap still widening, with social care at risk – November 2023, RebuildCostAssessment.com. Available at: https://www.rebuildcostassessment.com/post/rebuild-cost-gap-still-widening-with-social-care-at-risk (Accessed 13 June 2024).

• *Clark, Louise (2024) Home insurance premiums rise but remain below historic peaks – May 2024, ABI.org.uk. Available at: https://www.abi.org.uk/news/news-articles/2024/5/home-insurance-premiums-rise-but-remain-below-historic-peaks/ (Accessed 13 June 2024).

• *Families and households in the UK: 2023 (2024) Families and households in the UK: 2023, Families and households in the UK – Office for National Statistics. Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2023 (Accessed: 13 June 2024).