Myths and misconceptions about home insurance
Although home insurance is essential, it’s often surrounded by large amounts of information, advice that can go out of date and misunderstandings. These make it harder to know exactly what you’re covered for, and what to expect if something goes wrong.
We explain 10 common myths about home insurance to help you feel confident and ensure you receive the payout you are entitled to if you ever need to.
Must know
Understanding the biggest myths about home insurance can help you make smoother claims and avoid being left out of pocket.
In short
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Here are 10 common myths about home insurance:
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What home insurance really means
Confusion often starts with understanding what home insurance actually is. It’s a catch-all term for two types of cover: buildings insurance, which protects the structure of your home like the walls, roof, fittings and permanent fixtures; and contents insurance, which covers your personal belongings inside the home.
If you own and live in your home, you are likely to need buildings insurance to cover the property itself and contents insurance for your belongings. Although it’s not required by law, buildings insurance for your home is usually a condition set by mortgage lenders for taking out a mortgage.
If you’re a tenant, you can decide whether to get contents insurance for your belongings. Landlords aren’t legally required to insure the building, but they usually do since repairing or rebuilding it would be costly.
10 common misconceptions about home insurance
We explain 10 common myths about home insurance and the real facts behind them.
Myth 1: Home insurance covers all accidents
Home insurance will cover you if you accidentally break the glass while scraping the paint off a windowsill or drop a can of emulsion on the carpet, right?
Actually, it’s not safe to just assume it’s included. A lot of people think home insurance covers any accident, but that’s only true if you’ve picked accidental damage as an optional extra. It’s not something that comes standard and adding it raises the cost of your overall policy.
Your insurer should clarify what home insurance will cover. Ask them what is and isn’t included and whether accidental damage is an optional level of cover, so you’ll have no surprises if you need to claim and it was unsuitable.
Myth 2: Insuring the property for its market value
Another home insurance misconception is to insure your home on its market value instead of its rebuild costs. Freehold property owners frequently make this mistake when taking out a building insurance policy.
To make sure your building is properly protected, it’s important to base your calculations on rebuild costs instead of the sale price. If you don’t, you might end up underinsured. With building costs going up and more climate-related damage happening, the difference between rebuild costs and your property’s market value has gotten a lot bigger in recent years.
You can easily discover an estimated cost to build your home from scratch using the free resource provided by the Building Cost Information Service (BCIS): Residential Rebuilding Cost Calculator.
Remember, this is only a guide, you must ensure that any special features of your property (e.g. hard landscaping, outbuildings, decorative finishes, listed status, or conservation area) are taken into consideration.
Myth 3: Homes with a history of flooding can’t get insurance
After the devastating floods of 2007, a lot of UK homeowners found it hard to get affordable home insurance to protect them from future flooding, which just made their situation even tougher. But since then, a scheme called Flood Re has made flood cover more affordable, giving people more options and better availability.
In the UK, one out of every four homes will be in locations at risk of flooding by around 2050, which could make home insurance more expensive.1 So, in 2016, the government and insurers created Flood Re to support eligible homes in flood-prone areas, offering protection and peace of mind until 2039. To qualify, your property needs to have been built before 2009.
Flood Re says the scheme has helped over 300,000 households at risk of flooding since it started.2 Flood Re has also promised to make flooded homes stronger through its Build Back Better scheme, which Rias supports as part of Ageas Retail Limited.
Is your home at risk of flooding? Find out how to protect yourself with flood cover.
Myth 4: I have contents cover, so my belongings are completely covered
Many people assume their contents insurance automatically covers all their belongings, but that’s not always the case. It’s important to check that you have included and insured every item for its full replacement cost. Some things, especially those you take outside the home, might need extra protection, while others, such as your high value items, you may need to declare separately.
Usually, an insurer will pay up to about £1,000 to £1,500 to replace a single item. Imagine you have an Edwardian brooch worth £6,000 that's been passed down in your family, but you only declared its value as £1,500. If you make a claim, the insurer only has to pay you £1,500.
With inflation rising, which means that the cost to replace items goes up over time, it’s especially important to let your insurance company know about any valuable items you have so they’re covered. Also, take a look at your policy documents to check your current coverage limits, since these can vary between insurers.
Myth 5: You should bump up the size of your claim
Some people mistakenly think that insurance companies might try to unfairly lower their claim, so they feel it’s acceptable to increase the claim amount to compensate.
However, it is never OK. If you intentionally inflate the amount you’re claiming, it counts as fraud, which is a criminal offence and can lead to serious consequences. Beyond the legal risks, it could mean your policy is cancelled and getting insurance in the future may become much harder. At the same time, insurers must make sure any valid claim is handled fairly and settled properly.
Fake claims aren’t OK for another reason – they end up driving up insurance costs for everyone. The Association of British Insurers says fraud adds £1.16 billion1 to UK insurance costs each year, resulting in higher premiums for everyone else.
Myth 6: If I’m a bit underinsured, the insurer will knock a bit off
Not having enough insurance for your house isn’t only an issue if it burns down. The insurance company can reduce a claim by a fair amount, even if the damage is only partial.
If you insure your home for £250,000 when it should have been insured for £500,000, you are 50% underinsured. Some insurers may only pay a proportion of your claim in line with the claims limits on your policy. These are clearly outlined in your policy booklet under "claim limits on your policy". If your claim limits are less than the actual rebuild or replacement costs, you may not receive the full amount of any claim you may make. In some circumstances, you may find yourself without any cover at all.
Myth 7: I must get my buildings and contents insurance from the same company
Buildings insurance and contents insurance are two separate types of cover, and while you can get a policy that includes both, you don’t have to.
If you want, you can pick buildings insurance and contents insurance from two different companies. Just keep in mind that this means more paperwork since you'll have to handle two separate applications and renewal dates.
At Rias, you have both options - you can get buildings and contents insurance together in one combined policy or choose them as separate policies. Learn about our levels of cover.
Myth 8: My home is always covered by insurance when I’m away
It’s not safe to assume that you’re covered when your home is unoccupied or you’re away on holiday. It depends on how long your home remains unoccupied.
You might find that your insurance excludes or limits coverage for certain incidents if your home is left unoccupied for 60 days or more in a row. Here are some possible exclusions and limitations:
- Water leaks from taps or drains
- Storm or flood damage to gates, hedges, fences or pools
- Specific causes of damage like broken windows
- Theft
- New for old cover to replace goods. It is always best to check your policy to see what it includes and if there are any exclusions.
Myth 9: If the insurer accepted my answers online, any mistake is their fault
People often don’t realise the impact of giving wrong, misleading or incomplete answers online.2
If you provided significantly incorrect or incomplete answers when applying or making a claim, insurers might reduce, decline, or adjust your claims to match the premium you should have paid.
At the same time, the insurer’s website should ask you the right questions, be fair and not misleading. Questions should help customers give the right level of information, for example by guiding you on calculating a valuation or warning you of the outcome of using the incorrect one.
Myth 10. My belongings are covered outside the property as well
Some home insurance policies might cover your belongings when you take them outside your home, like bringing your mobile to work or losing a pedal bike.
Contents insurance usually only covers things inside your home, garden, or outbuildings. To cover your things outside your home, you may need to buy extra cover such as personal belongings cover. Check with your insurance company to find out what’s covered and what’s not, since it can vary depending on the insurer.
Rias will only cover your belongings outside the home if you add the optional Personal Belongings cover to your standard contents insurance policy.
Get a quote for Rias contents insurance.
Sources
2 https://www.floodre.co.uk/wp-content/uploads/19412_Flood_Re_Policy-Overview-v3.pdf