The basics include:
Home insurance policies that are transparent in their wording and the terms are clearly explained without jargon
Any exclusions are clearly defined – not lost in the small print
The insurer offers a broad range of policies to suit individuals with different budgets, needs and circumstances
Providing excellent claims handling and customer service
Taking the stress out of claims by providing full customer support
Competitive premiums with other insurance providers
There are numerous awards each year for home insurance providers by independent judges, for instance Which? The criteria is usually based on ratings for how speedily claims are handled and how the insurer communicates on claims progress. For 2020, Which? rated NFU Mutual in first place overall for home insurance with M&S Bank and LV= ranking second and third place respectively.
While it is important to take account of annual rankings, they will vary between rating agencies and over the years, insurers may up their game or their service levels may drop. As well as highlighting the best home insurance companies, independent rating providers will show who is bottom of the league at any given time.
Companies like Moneyfacts and Defaqto provide star ratings for home insurance providers. Moneyfacts only features home insurance providers that have achieved a 4or 5-star rating as part of their annual product review. Defaqto gives a 5-star ranking for the best insurance providers going down to a 1-star rating. Policy details that rating agencies look at include:
Maximum sums insured
Accidental damage cover
Personal possessions cover
Set-up, adjustment, renewal and cancellation fees
Voluntary excess discount
24-hour emergency helpline
Deeds and documents cover
Residential care cover
Business equipment cover
In addition to checking out the rating agencies, there are numerous online comparison sites where you can see how insurers compare on premiums and policy inclusions (or exclusions).
The quotes you will receive will be tailored to your specific property, so will take into account details like postcode, age and type of property, whether it is old and listed, if it is used for business, how close to the sea or local river, the state of repair, and whether you are the owner-occupier or tenant.
The data you provide will help identify the best insurance policy for you based on where you live and the property in question. It may be that some insurers will not want your business if they believe you are in an area at risk of flooding.
Alternatively, you might have an adverse insurance claims history which could limit the number of insurers willing to provide you cover. Some insurers cherry pick who they will insure – so for instance they might refuse you if you live in or close to a high crime area. Thankfully, just because you are turned down by one insurer does not mean you will be turned down by another – insurers will interpret data differently. It is quite possible though, that your premiums will be bigger if you live in or next to a higher risk area.
While you might not need every inclusion or extra within a home insurance policy, it is good to have the option. Most home insurance policies will include a standard set of risks attached to your policy but will allow you to extend your policy to include extra areas of cover. For instance, if you have 3 children under the age of 5, you might decide that accidental damage cover is a good idea given the amount of felt tip pens and crayons in the house!
Alternatively, if you have expensive road bikes that you keep in a garage or outbuilding, then cover for theft from sheds/garages is well worth including. However, if your bikes are worth a great deal, you might want to take out a specialist bicycle insurance policy.
You might also want to include cover for the contents of your fridge or freezer if it stops working for any reason.
In the past you may have lost your keys or left them in the house requiring a locksmith to get you out of the predicament. You may decide cover for loss of keys makes good sense – which will cover you for the cost of replacing the locks if that is required.
A good home insurance policy will clearly define its insured limits – and ideally these will be generous and not reflected in exorbitant premiums. The terms should be clear – so for instance, it should be clearly understood that the insurer will repay an item as new or pay the full cost of repair.
Many insurers offer an emergency call out service as sometimes you’ll need help fast – for instance you are locked out of the house or a burst pipe has flooded the house. A good call out service or efficient helpline can be hugely beneficial. It is true that you won’t really know how good the call out service or helpline is until you have cause to use it but it is a good idea to read reviews online by other customers. This will give you a steer as to how good the insurer is in dealing with emergencies promptly and efficiently.
While many of the features that make a home insurance policy for homeowners apply to those renting too – there are some subtle differences to look out for. For instance, it might be wise if you are renting to find a policy that includes tenants’ liability, as well as the basic contents insurance.
Tenants’ liability insurance offers you protection against losing your deposit in the event of accidental damage to a landlord’s fixtures, fittings and furniture. This includes anything from sofas and beds to carpet, baths, toilets and white goods.
So, if you accidentally spill red wine on the carpet or sofa, the cost of cleaning or replacing the damage will be covered – up to a certain specified sum. Some landlords might insist on tenants’ liability cover when you sign your tenancy agreement.
This is often the case when you are renting an already furnished home with quality fixtures, fittings and appliances. You may, therefore, not have a choice but to take out tenants’ liability cover but it is worth checking any policy you may already have since sometimes insurance providers include this cover as standard.
It might be the case that the best cover for you is a stand-alone tenants’ liability insurance policy. If the property is fully furnished including TV and electrical goods/appliances – you may have little of value amongst your own belongings to insure.
Even if you are happy with your insurance provider (in terms of what they offer as standard, what they allow to be bolted on and their general level of service), it is seldom a good idea to just auto-renew your policy.
Insurers have a history of offering the best deals to new rather than existing customers. You are seldom rewarded for loyalty – so if your insurance renewal is coming up, shop around and check what other insurers are offering.
If you find better deals elsewhere, contact your existing insurer to see if they can match or better the quotes from other companies. By doing this you are getting the best of both worlds – you can stay with the insurer you are happy with but now on better terms.
It is true that claims management and customer service levels can be rated – and this is highly important as nobody wants an insurer that drags a claim out and responds poorly when you need their help in an emergency.
However, all things being equal on the service front, the best home insurance policy will vary from individual to individual. For instance, you might be excluded by some insurance policies for a number of reasons, or an insurance policy with all the bells and whistles on its standard policy (but charges higher premiums) offers many features you don’t need.
To ensure you get the best policy that suits your needs it is important to do a few sums before you sign on the dotted line. Add the value of all your possessions up – include smaller items such as clothes and what it would cost to replace them on a 'new for old' basis.
By having an accurate valuation of all your belongings, you are less likely to be under-insured. For instance, if you insure £15,000 of possessions when in reality your belongings are worth around £30,000, you will effectively only have 50% of your contents protected.
The same principle regarding accurate valuations applies to buildings home insurance. It is important not to focus on your home’s current market value – that is what you would receive if you were to sell it. The insurance cover on your building relates to the ‘rebuild value’ – which is entirely different and usually much lower. One way to get a quick ball-park figure for the rebuild value is through the Association of British Insurers' calculator.
A good insurer should also take into account your efforts to reduce the risk of a claim – particularly for theft. If you boost security by installing better, approved locks on doors and improve security measures such as alarms and outdoor (movement sensitive) lights, then your insurer should be in a position to lower the home insurance premium.