Money Mensch: Meet the insurers who pay to cover you
This is an ultimate deal — some home insurers will actually pay to cover you. There is a way to play the system so you not only get a cheap policy, but the insurer gives you more cashback than the policy actually costs.
I am not guaranteeing that everyone will get paid, but this should cut costs by a fortune. The record result I have had from this system so far is a profit of £67 — a huge amount considering you also get a decent insurance policy on the back of it.
What cover do you need?
It is always important to lower your risks: window locks, a burglar alarm and being part of neighbourhood watch all help.
Yet do not assume you need the same cover as before; the recession has changed things. Buildings cover is only needed by those who own freehold property.
If you rent or are a leaseholder, generally the freeholder or landlord has the building cover for you. Many people mistakenly over-cover by insuring the market value of their home. In fact, you are supposed to cover the rebuild value, the amount it would cost to rebuild your house if it were knocked down, and you had to start again from scratch.
The lower cost of building projects and raw materials may also mean that even those who were correctly covered in the past might find that their rebuild cost has dropped. The Association of British Insurers (ABI) has a calculator to help you work out what you should be covering, at http://abi.bcis.co.uk
Contents cover applies to far more people. It strictly covers the contents of your property. The best way to think about where buildings insurance stops and contents starts is by imagining if you could pick your house up and turn it upside down. Everything that could fall out would be contents; everything that was still in it would be building.
However, there are always some grey areas, which is why, if you need both, it is generally better to get buildings and contents insurance from one insurer, even if slightly more expensive.
Search hundreds of insurers in minutes
There is no one cheapest insurer. To find the cheapest, you need to get quotes from as many as possible. Luckily, screenscraping comparison websites make that easy. With them, you put in your details, and they whizz the info out, then scrape the quotes off the screen.
Yet often they list companies they have commercial relationships with, meaning they do not all search the same sites. Therefore to easily boost the range of your search, use them in combination.
My top three for home insurance are www.confused.com, www.comparethemarket.com and www.moneysupermarket.com, which in total look at 43 different brokers and 37 insurers. It only takes five minutes to search each site. You can, of course, go further, and check those firms which do not allow access by price comparison sites, such as Norwich Union (www.norwichunion.com) and Direct Line (www.directline.com ). There is a full listing and ranking of comparison sites at www.moneysavingexpert/homeinsurance
Once you have found the cheapest quote via a comparison site, always check it directly with the insurer’s own website to ensure that no incorrect assumptions were made, that the excesses are correct and the policy is suitable for you.
A quick reminder: there is no such thing as monthly home insurance. In fact, if you sign up for monthly payments, what happens is that the insurer lends you the money, and charges you interest for it. It is usually cheaper to pay it all in one go.
There are special sites that carry paid links from retailers and financial services providers. If you are registered with them, and you click through to the product, they get paid.
Importantly, they then give you some of the money back, so you get the same product but you also get a cut of its revenue.
Not all insurers are included, and you should never choose an insurer just for the cashback. Yet if your cheapest pick does pay out, then you could be quids in.
Sometimes you can get £75 to £100 cashback on home insurance policies, so if you have quite a cheap policy, you could be in profit after your first year.
Sites to look at include www.quidco.com and www.topcashback.co.uk. There is a comparison service to find which cashback service will pay you the most at www.moneysavingexpert.com/maxcashback. This is how people make a profit.
Remember next year
Once you are covered, always remember that you tend to pay more as an existing customer than as a new one. Insurers often send their renewal policies as late as they possibly can, to encourage you to simply allow it to continue.
Put a reminder in your diary six weeks before your cover is due to end, to ensure you get the best deal next year.