frugal friday – being an insurance tart

(These chicken shaped ginger biscuits have nothing to do with this post at all, I just made them the next day and they were far more cheerful than a picture of my grumpy face while sorting the insurance out).

A couple of weeks ago I wrote about Project Piggy Bank – my attempt to spend less on bills and more on adventures. I’m reporting back with my first major success!

House insurance is something I’ve happily ignored for my much of my life. I’ve mostly lived in shared houses where insurance is included in the rent, and when I’ve had to arrange my own it’s been for contents only, and usually just for one room.

In our current house, we had two separate policies – one for buildings and one for contents, and both were set up to automatically renew each year, so I felt entirely free to ignore them, until now.

Back to basics

First thing to establish – what’s the difference, and do we need both?

My first point of call in all of these financial adventures is the money saving expert website. Their guide to home insurance was just what I needed to guide me through the sticky  (and, let’s face it, fairly tedious) swaps of insurance buying.

Apparently thing to do is to imagine turning your house upside down and shaking it – everything that falls out is contents, everything that stays put is buildings. Buildings insurance is often a condition of a mortgage, and so in our case (probably) essential, whereas contents is only advisable. Our contents insurance renewed itself just before Christmas, so buildings (due very soon) was the priority.

Yawn.

(I should probably confess here I found the whole process utterly tedious and was only motivated by the amount it would save, and by the knowledge that, if pushed, I can get my head round pretty much anything, and insurance wasn’t going to beat me. If you find this as tedious as I did, feel free to ignore the rest of this post and do something more interesting).

Buildings insurance

First step – establish if the mortgage requires us to have buildings insurance. I’m afraid I was already bored of thinking about insurance, and didn’t want to start reading mortgage documents too (if I could even find them) so I ignored this and assumed it was required.

Second step – figure out how much the house would cost to rebuild (apparently you’re meant to insure the rebuild value not the market value). I went here, which has a ‘handy calculator’. All fine until it asked me what the external floor area of the house was. Er…? Fortunately our house is quite small, and reasonably square, so I went outside in my slippers in the dark and found a stick around 1 metre in length, and measured (kind of) two of the outside walls, made a cup of tea, then entered the numbers into the calculator (135 square metres, apparently, if you’re interested, which I wasn’t). That gave me a rebuild value.

I wanted to have buildings and contents on the same policy (not necessarily the best value, but the least fuss…). And so, the next thing was to figure out the details for the contents insurance.

Contents insurance

First step – determine the value of the contents of your house. The important thing seemed to be not to under-insure, so I toddled off as directed by MSE to this contents calculator, then spent several minutes laughing at the prospect of determining the value of my ‘wine collection’ (about a fiver), ‘fine art’ (er, there’s a few postcards on the wall), or ‘guns’ (does the water pistol in the cellar count??). Hmm. Fortunately MSE also directed me to a rather more useful calculator. I printed this off, grabbed a pencil and another cup of tea and put on my determined face.

I didn’t realise it would be so difficult! You’re meant calculate how much it would cost to replace old things with new, but (a) everything in this house is second hand, apart from one settee and the mattress, and (b) if the house did burn down, we wouldn’t buy anything new, it would all be second hand. The whole process felt artificial. I did get on the internet and work out the cost of buying a new tv, and a new sofa, but really, I wouldn’t buy them new anyway, so that almost felt like an insurance fiddle before I started!

Second step – figure out if you have any items to add individually that are either high value or need insuring outside the home. I made another cup of tea and sat down to work out how much it would cost to replace things like bikes, laptops and musical instruments. Yawn yawnity yawn.

Finding the right policy

Armed with all my new information, I made another cup of tea and sat down with the MSE guide to comparison sites. I’m afraid my patience was wearing thin by this point so I only did the first one.

Comparison sites are one of those things that are meant to be helpful as they give us more choice, but I don’t actually want choice, I want one decent policy, and what I REALLY want is someone else to find it for me.

The cheapest policy I found was £130 for the year, for both buildings and contents insurance. That was with an insurer I’d never heard of, and I made the mistake of reading internet reviews, which were almost all negative. Then I realised that most internet reviews for all insurers, even the ones I’d heard of, were pretty negative, so I went back to ignoring them again.

I checked a cashback website, as advised, and found that a few insurers were offering around £40 cashback for taking out a new policy. However, I was so fed up of the whole thing by this point that I decided I would happily pay that £40 to stop thinking about insurance RIGHT NOW, so cashback was ignored too.

Savings

FINALLY, after about four hours (and several cups of tea), I bought a policy with the Post Office. At least I’ve heard of them. Our original renewal price had been £355 for contents, and £507 for buildings – a total of £862. The new combined, more accurate policy?

£206

Even with the cancellation fee for the previous contents policy (which had already started), that’s still a saving of over £600 for the year. I know I huffed and puffed and grumped my way through it, but £600 for four hours work ain’t too bad.

What have I learned?

Automatic renewal is included in lots of terms and conditions, and it seems our insurers have just increased and increased the amounts over the year without us paying any attention. I have a big notice in my diary to check this time next year when it’s coming up again.

This process is worth going through, however tedious. Next year I’ll already have most of the information I had to figure out this time, so hopefully it’ll be much quicker. I might even brave a cashback experiment too.

Have you ever gone through this process? Did you find it as tedious as I did? What did you do with the money you saved?