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High-Value Home Insurance clients are like every other… they don’t want to be ripped off! Obtaining value for money is essential, no matter your net worth.
Part of the role of a broker is to obtain value by working with insurers, underwriters and managing general agents (MGA’s). However, this is tough, particularly with the following in mind:
- Index linking increases: As you will be aware, inflation in the UK is currently in a cost-of-living crisis, and inflation is high! No one can be sure when this will be coming down.
- Buildings sum Insured increases: It’s costing more to rebuild our homes. The BCIS rebuilding cost index is currently a staggering 17.45% (although your insurer may decide to index link at a lower level). This is the highest uplift seen in construction costs since the ABI and BCIS started this service.
- Increased alternative accommodation costs: Insurers are noticing higher costs in alternative accommodation brought about by delays to repairs and construction works
- Contents sum insured increases: Contents, art & antiques are indexed via the Consumer Durable Index. The UK has had a rise in inflation by 9.99% in the last 12 months.
- Increase in value of watches and jewellery: If you have had your watch or jewellery item(s) appraised recently, you may be surprised by the results. Precious metals have substantially increased in value over the past two years, and they need to be insured for the total replacement cost
A combination of the above is a pathway for increased sums insured and this means increased premiums (for a rough guide on how much your insurance could cost, read our high value home cost calculator here). You can read more about ‘why does my home insurance cost keep increasing?’ in a recent blog by our MD William Cooper – click here.
Five ways to keep your costs down
It’s not all doom and gloom. Here are five top tips to help you keep costs under control:
- Add a voluntary excess: High value home insurance products usually carry a £250 compulsory excess. Ask your broker to (1) increase the total excess to £500 or £1,000 on buildings and contents; and (2) to increase this to £500 or £1,000 on buildings only but leave the contents alone. Compare the difference between the two and make note of the saving.
- Add a valuables floating limit: If you own a significant amount of jewellery and have a cash-rated safe installed (click here to read our safe guide) but do not wear all the jewellery simultaneously, then ask your broker to apply a floating limit. For example, if I own £100,000 of jewellery and have a £6,000 cash-rated safe installed but only wear £35,000 of jewellery at any one time, I can ask the broker to apply a £35,000 float limit which effectively means the insurance product will rate the jewellery in the safe lower than the jewellery which floats between the safe and being worn. This can have a significant impact on your premium!
- Ask to remove the travel insurance: Some products include travel insurance and charge an additional premium. If you have a premier banking account or credit card, the chances are you have travel insurance already (but double-check with your bank or credit card provider first!)
- Split your buildings and contents policies: We do not recommend this, but it is an option if you are under a tight budget (and circumstances justify you do this). You can put your building insurance with one provider and your contents with another. Doing this can unlock the sweet spots of providers and keep your costs low. The downside to doing this is multiple excesses and loss adjustors in the event of a claim causing damage to buildings and contents.
- Avoid smaller claims: It might seem counterintuitive, but making a more minor claim can cause more significant increases at renewal. If the estimated total loss is less than double the excess value, then you might be better off picking up the cost yourself. Speak to your broker for advice before putting in the claim.
If all else fails, have an honest chat with your broker about your situation and see if there is anything else you can do.