According to reports by the BBC on the 11th of April 2017, house prices have started to pick up once again, with the average rising by 5.8% during the 12 months to February of that year, representing a further increase on January’s figures when the 12-monthly rise was 5.3%.
Meanwhile, in the commercial property sector, the Royal Institute of Chartered Surveyors (RICS), also reported that the first quarter of 2017 saw positive movements in rental incomes and capital growth.
This points to encouraging signs in the property market, but if you already own, or are intending to invest in either residential or commercial property, it is still important to take into account the need for property insurance.
This means that you are also likely to keep a weather eye on the cost of that insurance and look for ways of reducing the financial burden.
How might you do that?
Avoid over-insuring the building
- when arranging cover for the building itself, remember that the total building sum insured needs to cover the cost of reconstruction in the event of an incident which leads to the complete destruction of the property;
- reconstruction costs are not the same as the property’s current market value and a failure to make that distinction might lead to the common error of over-insuring the building and paying more than you need in insurance premiums, suggests the Money Saving Expert, in advice which was updated in May of 2017;
Avoid under-insuring the contents
- on the other hand, says the same source, it is a common mistake by homeowners to under-insure their contents, in an effort to save money on the insurance premiums;
- in the event of a claim, this is likely to mean that the settlement is insufficient to cover the cost of repairing or replacing the lost or damaged items;
Combine your building and contents insurance
- although it is quite possible to buy these essential elements of property insurance entirely separately, it is cheaper to combine them by buying both together;
- in figures published by the Association of British Insurers (ABI) on the 9thof February 2017, it was shown that during the course of 2016, the average cost of combined building and contents insurance policies fell by 2%;
- when bought separately, however, the average cost of building insurance premiums rose by 5% and contents insurance increased by 3%;
- many insurers offer the option of paying your property insurance premiums in monthly instalments;
- but the cover is still based on an annual premium, so if you choose to pay monthly, you are effectively buying your insurance on credit – and therefore paying the appropriate rate of interest for that facility;
- to avoid paying any such interest at all, simply pay your property insurance premium in one amount at the beginning of the year of cover;
Consider the excess
- property insurance invariably includes a range of excesses, depending on the type of claim that is made – it might be in the tens of pounds on a claim for a damaged item of contents, for example, but £1,000 or more if you are making a claim for subsidence;
- you might want to consider accepting higher rates of excess in return for a reduction in the cost of premiums.
Whether you already own or are looking to buy property, sooner or later you are likely to consider the need for property insurance. You might want to keep in mind some of these tips and suggestions about ways to reduce the cost.