House insurance renewal premium

Just had my house insurance renewal in. Thought I'd be good (like what
everyone tells you to do) and ring round a few companies to find out if
I can get it any cheaper. Two things popped up:
a) the AA (who are normally very good) asked me for the market value of
the house; most companies seem to ask for the rebuild value. I have no
idea what the market value of the house is, and it would be a wild guess
(and probably wrong). I'm not happy about guessing it, especially if I
got it wrong (and they declined to pay a potential claim saying I'd
provided the wrong information). I have a reasonably good idea what the
rebuild cost is. Needless to say, I didn't take the AA quote any
further.
b) My buildings are insured for £125K. A couple of companies quoted for
cover with a blanket cover of e.g. £500,000. I felt this was too high
and didn't feel like paying a higher premium for being over-insured (and
I thought insurance companies didn't like you over-insuring anyway) and
asked them to reduce it. Perversely, by specifying the value (even
though it was less) this increased the premium! I can see why this
might happen (bog standard policy with standard values turns into more
expensive bespoke policy when you alter default values) but it's
counter-intuitive.
Just two titbits of my exercise this morning.
Reply to
Allan Gould
Unusual. I would have thought most people would have a good idea what the market value was but not the rebuild cost.
Needless to say, I didn't take the AA quote any
Oh?
If they charge you less for being (technically) over-insured, why should you worry? As long as they pay what it costs to rebuild it (up to a given maximum) then you're OK, aren't you?
Rob Graham
Reply to
Rob graham
Did you ask why? I can't see how the market value is relevant.
The rebuild cost is usually on the renewal, index linked every year. I know exactly what my rebuild cost is but haven't got a clue about the market value of my house.
Reply to
Andy Pandy
Do you mean you know what you're insured for regarding rebuilding (and calling that the rebuilding cost), or do you get a regular estimate from a surveyor as to what it is? These may be different. Annual indexation helps to keep the insured value in line but it is only a mechanical way of doing it - better than not doing anything. But it doesn't mean it's right.
Rob
Reply to
Rob graham
"Andy Pandy" wrote
What makes you think that your house insurance indexation is correct for *your* property's rebuilding costs?
Reply to
Tim
More confusing still, why are rebuild costs so *hugely* different in different parts of the country. OK, so wages vary, but not by a factor of two or three times.
Reply to
usenet
Bitstring , from the wonderful person Rob graham said
Beware some insurers (e.g. Churchill) whose policy states 'building costs indexed', but whose 3-bedroom house policy has had an upper limit on rebuilding costs of £250k (iirc) which has NOT been indexed for at least 5 years to my certain knowledge.
How they square that circle I am not sure - I've yet to get the intelligent dog on the end of the phone, and 'Tracy' hasn't a clue.
Reply to
GSV Three Minds in a Can
Ask the builders. They are the ones who'll charge if you have to use them. Inflation is only a measure of the increase in price of a basket of goods and services. It doesn't mean that the cost of any individual item will rise by the same amount.
Rob
Reply to
Rob graham
Because it's a fairly standard property, so I don't see why the rebuild cost should significantly vary from the index of rebuild costs my insurance company uses.
Reply to
Andy Pandy
... which only applies to the *average* re-build. Is your's an * "average" * house (in every respect)?
Reply to
Tim
"Andy Pandy" wrote
A loaf of bread is a "fairly standard" item in the basket of goods used to calculate retail price indices. Do you think that the price of bread today is very close to the price it was 25 years ago, indexed by RPI?
Reply to
Tim
Oh FFS. The RPI includes masses of other things like beer and transport prices. The cost of a loaf of bread could vary greatly from the RPI. I don't think the cost of rebuilding my house would vary greatly from the cost of rebuilding the average house.
Reply to
Andy Pandy
I think you've got this totally wrong. I've had buildings cover with the AA for years (in three very different locations in the UK), and although I regularly check the competition I've always found them to be the best value. I don't recall ever even being asked the market value by them, all they are interested in is the number of bedrooms; my policy doesn't mention any market value or rebuilding cost, instead it says "Maximum Insured Value: unlimited". Unusual, but I think that's a real plus, because there's no risk of being under-insured in the event of a claim.
Maybe they asked you the market value just to check that your home falls into the norm expected for a house of a given number of bedrooms in your area etc.
David
Reply to
Lobster
Easily tested. I'll bet plenty of folk here have remortgaged their current homes which has necessitated a new valuation survey. How did the rebuilding cost in the new survey stack up against the figure in the orginal survey on purchase, once it has been index linked for X years? If you're correct, then the two figures would be identical, right? I'm willing to bet that in many cases there will be a big disparity after a few years.
David
Reply to
Lobster
"Do you think that the price of bread today is very close to the price it was 25 years ago, indexed by RPI? "
Well, actually I would have thought so. Am I mistaken?
Robert
Reply to
Robert
On 27 Jul 2005 01:01:19 -0700, "Robert" wrote:
I don't know what bread cost 25 years ago but 30 years ago (when the retail price was regulated) it was 15p for an 800g loaf. If that had followed the RPI it would cost you £1.14 today. I got an 800g loaf of Tesco stay fresh sliced white for 44p the other day. Not the cheapest nor the most expensive I could have got. If I work back using the RPI my 44p loaf today would have been about 9p 25 years ago which it clearly was not.
Simon
Reply to
Simon

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