Counting the cost

THINGS you want to protect in your life do not come much bigger than your home and your possessions but as yesterday's Star revealed, some people still don't take out insurance.

By Tracey Sparling

THINGS you want to protect in your life do not come much bigger than your home and your possessions but as yesterday's Star revealed, some people still don't take out insurance.

After Norwich Union raised its home insurance premiums by ten per cent this month -partly due to the bill for flood damage - features editor TRACEY SPARLING reports on the need for insuring your home's contents.

LIFE in Suffolk has carried on as normal this summer, if a little damp, but this summer's floods have reminded us all of the devastating impact that severe weather can have on people's lives.

We saw people across the country being rescued from their homes by boat, returning days later to clean up the muddy mess, and rusting white goods piled on front gardens.

Your biggest single purchase and your greatest financial commitment is likely to be your home, so it makes sense to protect both your bricks and mortar and what is inside, against the worst. From fire to flood, storm to subsidence - to the theft of your possessions like Andrew and Emma Hunt from Little Bealings suffered last Friday - you cannot afford to cut corners when it comes to safeguarding your home's contents.

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The couple are preparing to buy a Doberman dog and to install CCTV, an alarm system and electric gates on their driveway. Mr Hunt said: “When we came here we thought nothing like this would ever happen…I just want people to realise what could happen.”

One in four people still don't insure the contents of their home, despite insurance being available at your mortgage provider, bank, insurance brokers, and even some supermarkets getting in on the act.

The main reason could be that costs are climbing. The average cost of a buildings insurance policy stands at £209, and has risen by two per cent over the past ten years. The average cost of contents insurance is £152 and has risen by 5pc.

The Association of British Insurers (API) warned back in 2004 that the value of claims for house and contents insurance may triple because of increased extreme weather thought to be caused by global warming, and its Climate Change Conference on September 13 will focus on how climate change is affecting weather patterns and increasing costs.

The number of winter storms in the UK has doubled over the past 50 years and the 1990s were the warmest decade since records began. The floods in autumn 2000 damaged 10,000 properties and led to claims of nearly £1bn. Last summer the UK had its highest temperatures on record, boosting subsidence claims to nearly £400m and this summer's floods have cost insurers in excess of £3 billion.

Norwich Union, which insures around a fifth of British homes estimates that it will pay out £340 million to repair damage caused by June and July's floods, and premiums went up by ten per cent this month . It says that while flooding is one of the elements causing claim inflation, premiums were under review before these events. Experts said if nothing is done the current value of claims could double or even triple by the middle of the century.

ABI spokesman Malcolm Tarling said today: “One company (Norwich Union) has put its prices up, and others have indicated they may have to raise prices, but it is a very competitive market because there are lots of companies out there and always will be.

“Extreme weather is a factor as to why prices are rising, but how much it's due to climate change remains to be seen.”

He added: “We do advise people to shop around and compare like for like policies rather than just go for the cheapest. You need to know what's covered and that large, valuable items are protected.”

1 Shop around. Your mortgage lender will probably try to get you to take their own policy. Most people used to take these because life was tough enough without having to make dozens of calls to find a cheaper option. But the internet has changed all that. You can have the market checked for you by filling out a simple application form on various websites and save thousands of pounds.

2 Don't underinsure. Even old furniture will be expensive to replace. Too many of us regret having miscalculated when it comes to having to buy new things and finding how much we should have insured for. Go through each room and list what you have. Be realistic about the replacement costs. For high value items like antiques get an independent evaluation.

3 Be wary of "blanket cover" packages which some insurers offer. These are based on the number of rooms. You may end up paying more than necessary.


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