RISING property prices does not mean higher home insurance costs. In fact, using The Property Insurer, you are likely to save a load of cash on your home insurance regardless of how high your property rises in value.
According to Rightmove the average asking price for new property is £292,572 which is up 6.2% on last year and paving the way for even higher rises next year. Read about the whole story here on Property Eye.
But the actual sale price of your house has little to do with the cost of insurance. Home Insurance is rated on the rebuild value of the property which can be massively different. A typical three bed semi detached property in London may retail at £1-million easily. But the rebuild value may be only £200,000 – or even less. You’d be surprised what you can build for £200,000, there are many dream four and five bed homes built for less out there.
So the insurance is only concerned with covering the rebuild value. It has no influence from the sales price whatsoever. And because the rebuild value is usually much less than the sale price, it means you are insuring less value and that means lower prices.
If an underwriter rates a property at 7pence per £1000 insurer, then a £200,000 property will cost £140 to insure for the year. If it was the full £1-million you wanted to insure, you’d pay £700 – but you’d be massively over insured and paying for cover you neither need or could use.
Overinsurance is a common mistake by homeowners worried about getting the right level of cover. But it costs them money for the extra insurance and if they ever make a claim they cannot use it because the values do not add up.
The rebuild value for homeowners is only the buildings insurance element of home insurance. You will also need contents insurance if you own anything of value in the property, which most people do. Everything from televisions to computers, books, clothes and even the contents of your fridge can be insured against loss.
Contents insurance will go up or down depending on the total value of what you own, how many high value items you have and whether you want cover away from home or not. You can insure a lot under your home insurance policy – mobile phones, cameras, jewellery and bikes amongst others. It is often cheaper to buy all the cover in one go to benefit from discounts that can be applied by a good broker or insurer.
The Property Insurer gives you access to some of the best home insurance specialist providers in the UK that work with you to get the right insurance cover and best prices. Why not visit today and see how much you can save, regardless of how much your property may be rising in sale price!