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For many years in the UK, motor insurance has been a competitive marketplace. Consumers have been used to shooping around at renewal time with a host of direct companies available. The internet has further fuelled this change allowing more people to access better information when their policy is due for renewal.
Home insurance has until recently been a much more stable financial product. The relative stability of pricing, compared to a very fluctual motor isnurance market, has meant that consumers have stuck with renewals because the pricing has remained static.
However the internet is also encouraging people to shop around for their home insurance too. The good news for the household insurance consumer is that there are savings to be made on your buildings and contents policies from simply shopping around.
Most people while looking for a cheap insurance deal on their policy also consider the exact cover that they need. If you reflect that you need to be able to replace all of your contents at todays shop values, you might find that you need more cover than you originally thought.
Cutting costs by cutting corners can have a serious effect on a home insurance claim. If you are deemed to be under-insured by your home isnurance company, they may apply the condition of average.
This works on the basis that if you did not insure for the full value of your belongings, the insurer will pay out only to the sum that you did insure and they will deduct a further payment from the payout equal to the percentage you under-insured.
This might be clearer in an example - Imagine you own £50,000 of contents in your home but choose to insure for just £25,000 because you thought that this was the maximum a thief could get away with. If your home suffered a catastophic fire and you lost all of your possessions then your insurer could apply the condition of average.
Under this right they can pay out only 50% of the sum insured because that is the value that you under-insured by. In this case they could pay just £12,500 even though you lost £50,000 of your contents.
Insurance comapnies will always take this on a case by case basis but the only way to protect your home contents is to insure properly to the full value.
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