Combined Insurance, No Claims Bonus & Changing Your Cover
Combining Insurance
Buildings Insurance and Contents Insurance are important policies to have, as they protect your home and possessions against most damaging occurrences. However, searching for two policies can be time consuming. To help solve this, a large number of insurers have introduced combined "Home Insurance" policies.
A Home Insurance policy covers the same areas as both Buildings and Contents Insurance, but usually comes with a discount from the separate prices.
Many insurers offer discounts for purchasing more than one type of insurance from them; these can range from between 5% to 15% depending on the cost of the policies and insurer.
E.g.: If you are looking at taking out or renewing Home Insurance and Car Insurance, then it makes sense to see if you can gain any discount from a three policy (Buildings, Contents, Car) purchase.
It is important to remember that Home Insurance does not cover a Home Office, and a separate or different combined policy will be needed for the business contents.
No Claims Bonuses
If you take out selected policies and do not make a claim in a year, you become entitled to a year's no claim bonus. This basically means, the longer you go without a 'fault' claim (Where the damage/loss was your fault), the bigger discount you get off your premium. If you do then make a claim, the no-claims bonus is normally reduced by 2 years.
The most common policies with no-claims bonus are Buildings and Contents (Home) Insurance, and Car Insurance.
(i) Home Insurance
The No-claims bonus varies from around 10% to about 40%, depending on the policy, the length of time without a claim, and the insurer. Contents Insurance generally has a higher no-claims bonus than Buildings Insurance.
(ii) Car Insurance
The No-claims bonus varies from around 20% to 70%, depending on the policy, the length of time without a claim, the insurer, and the type of insurance (3rd party / 3rd party fire & theft / comprehensive)
(iii) Bonus Protection
If you have earned a no-claims bonus over a number of years, it may seem unfair to damage it in the event of a single claim.
"insure your no-claims bonus for a relatively small amount each year"
Many insurers are now providing an option to 'insure' your no-claims bonus for a relatively small amount each year. The details of these bonus protections vary significantly depending on the insurer, but they generally allow you to make one or two claims in a two or three year period before your no-claims discount is affected.
No-claims protection is mainly available on Car Insurance; there are very few Home Insurance policies which currently have this option.
Increasing / Decreasing Your Cover
Many insurance policies allow you to adjust details such as the amount of cover by increasing or decreasing the cost of the policy accordingly.
E.g.:
1. Home Insurance (Contents) cover can sometimes be raised from (for example) £35,000 to £50,000 by increasing the cost of the policy by a set amount/percentage.
2. With some policies, increasing the Excess (The amount you pay towards each claim made) from (for example) £250 to £500 will bring a set amount/percentage discount to the policy cost. However, in the event of a claim, you will always have to pay the extra amount.
Adjusting your cover to save money on the policy cost can be very useful; however you must be certain that you are not making short term gains that will make you worse off in the event of a claim.
What to Do If You Have a Problem
If you are having a problem with your insurance company or broker, there are three main bodies to speak to the General Insurance Standards Council regulate the Insurance industry
If you are unable to get a satisfactory answer to a complaint, then the Financial Ombudsman may be able to help
Using a broker can often save you effort and money, but may take longer and means you will not always be directly be purchasing your policies.
Buying Insurance online can save you up to 5-10%, but you should be extra careful that the fine details of the policy are providing the cover you need.
Buying more than one type of insurance from the same insurer can get you discounts of up to 5-10%
Buying Buildings and Contents Insurance together in a Home Insurance policy will save you money on the individual cost.
If you run a Home Office, it is not covered by a standard Home Insurance policy. You will need a separate Home Office policy, or a combined Home and Home Office policy.
A no-claims discount can save you up to 40% on Home Insurance, and up to (more than) 50% on Car Insurance if maintained for a number of years. It can also be protected for a small sum on most Car Insurance policies.
Many policies allow you to adjust the amount of cover to save on the policy cost, this can be a good idea, but you should always be careful that it will not leave you stuck in the event of a claim.
If you have a problem with your insurer or broker which cannot be resolved, then there are several regulatory bodies you can write to that may be able to help you find a solution.
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