Buildings and Contents Question

kayleighae

We are at the last stage of getting a mortgage, confirming our buildings insurance with the bank. Last Saturday had a compulsory appointment with the bank to discuss their policies. They wanted £33 a month and I had a feeling it wasn't the cheapest option. One thing the mortgage advisor told us was that as we are buying a semi detached property we need to insure both ours and our neighbours contents in case we accidentally start a fire for example - is this true?
And secondly she said that for example we only had contents insurance for £25,000 but the contents were valued after a fire at being worth £50,000 the insurers only pay out 50%. So £12,500 for your contents and also only 50% of what your house was insured for. Is this also true?
My partner did ask, well why would anyone buy a joint buildings and contents policy then? She replied well you can purchase separately if you like. Any advice appreciated

davidmcn

kayleighae wrote: »

One thing the mortgage advisor told us was that as we are buying a semi detached property we need to insure both ours and our neighbours contents in case we accidentally start a fire for example - is this true?

No, it's complete nonsense. Besides, how would anybody know what all of their neighbours' contents are worth?

And secondly she said that for example we only had contents insurance for £25,000 but the contents were valued after a fire at being worth £50,000 the insurers only pay out 50%.

This bit is true, you need to give them the total value for your contents.

So £12,500 for your contents and also only 50% of what your house was insured for. Is this also true?

No.

My partner did ask, well why would anyone buy a joint buildings and contents policy then? She replied well you can purchase separately if you like.

You can, though unlikely to be cheaper given that much of the cost is just for admin.

Any advice appreciated

Ignore everything your mortgage advisor has said, since it appears to be a load of mince, and instead look at the insurance advice on this site (in particular how to get the best price, rather than whatever rip-off the bank is offering).

alchemist.1

Seems like crossed wires /an attempt at selling increased cover/Not understanding the different aspects of insurance.

I wouldn't be insuring the contents in my neighbours property for a start. They will/or they should have their own insurance policy.

If you are only insured for a maximum of £25000 for contents then this is the maximum amount you will get back for contents damaged in the fire (Which is 50% of the £50000). The maximum limit for the buildings aspect is usually different and a lot higher otherwise the policy is completely worthless.

AdrianC

kayleighae wrote: »

And secondly she said that for example we only had contents insurance for £25,000 but the contents were valued after a fire at being worth £50,000 the insurers only pay out 50%. So £12,500 for your contents and also only 50% of what your house was insured for. Is this also true?

No. You insure for £25k, but it's worth £50k, you get £25k - 50% of the value, because you insured for 50% of the value.

eddddy

It's very strange that a bank's mortgage advisor, who is also selling insurance products, would make elementary mistakes (like the one about semi-detached houses).

Banks have been hit very hard from mis-selling insurance (PPI etc), so they are focussing hard on compliance.

I would be tempted to raise a complaint with the bank.

Gorg

Shop around yourselves and compare the quote to the one from your bank. Our joint buildings and contents was about £290 for the year - and that was a super comprehensive policy because we have a lot of contents that needed cover.

halfone

kayleighae wrote: »

One thing the mortgage advisor told us was that as we are buying a semi detached property we need to insure both ours and our neighbours contents in case we accidentally start a fire for example - is this true?

I hope not - but I'd love to know what her advice would be re. contents insurance if you were buying a terraced house:rotfl:

kayleighae

Thanks all, I am tempted to complain because it was a high pressure sell with quite a few strange and doubtful comments. This was on top of a life insurance pitch. Couldn't be more obvious that she was on commission. We have found a much cheaper policy elsewhere. When she said if you don't purchase this by completion the offer is gone and you will have to pay so much more was the clue. That must be the cut off for her claiming her commission!

G_M

alchemist.1 wrote: »

If you are only insured for a maximum of £25000 for contents then this is the maximum amount you will get back for contents damaged in the fire (Which is 50% of the £50000).

It's more complex than that.

If you take out insurance for less than the actual value (eg you have £50K's worth of contents but only insure for £25K), then you will only receive 50% of any claim.

So if a burglar steals your £2000 laptop, you will only get back £1000 (because you have only insured 50% of your contents).

It will not affect your buildings insurance which is a separate policy legally, even if purchased together, though the same principle applies - if you insure your building for £200,000 but after a fire it costs £400,000 to clear the land and rebuild the property, then you'll only get £200,000 and similarly if a burglar causes £500 of damage kicking in your front door, you'll only get £250 as you under-insured by 50%.

(ignoring any excess of course).

You do not need to insure your neighbour's contents. Or building.

Every policy I've ever seen includes cover for legal liability (usually £2m or more), so if your neighbour (or their insurer) sued you for starting a fire which damaged their stuff, your legal liability cover would kick in.

Use comparison sites and shop around. You do not have to use the mortgage lender's insurance. Or the bank's. Or the adviser's.

SailorSam

I haven't Contents insurance for years and years, only Building.

alchemist.1

G_M wrote: »

It's more complex than that.

If you take out insurance for less than the actual value (eg you have £50K's worth of contents but only insure for £25K), then you will only receive 50% of any claim.

So if a burglar steals your £2000 laptop, you will only get back £1000 (because you have only insured 50% of your contents).

So if you declare you have 25k worth of contents (including the £2000 laptop), do you get the 2000 back or is it still the 1000?