Cut the cost of your home insurance

It's easy to cut £100 or more from your annual home insurance bill. But is it wise?

Crash. Bang. Aargh. Oops.

There's no doubt about it: accidents happen. And when it comes to your home and your most precious belongings, it's easy to feel very vulnerable.

Some home insurance providers will try to feed on your fears by selling you 'accidental damage cover' for both buildings and contents policies.

You may believe it's worth paying extra for this extra protection and peace of mind.

But let's take a look at the small print and the costs in more detail. I'll use a buildings sum-insured (the cost of entirely rebuilding the home) of £85,000. The total contents are £45,000.

Basic buildings insurance

The cheapest basic buildings and contents policy I found cost £171 in a Farnborough post code. With this policy, as with most home-insurance policies, you're already covered for many incidents involving risks such as:

Fire, smoke, explosion, lightning, earthquake, floods, theft, water damage from escaped water, oil damage from escaped oil, subsidence, damage caused by your aerial or satellite dish falling, replacement locks, vandalism, falling trees, and collision by vehicles.

The exclusions do rack up though. Here are some examples of damage that is excluded:

• Storm damage to gates, fences, hedges, drives and paths.
• Whilst damage caused by a leaking radiator or pipe is covered, the repair or replacement of the radiator or pipe usually isn't.
• Damage caused when a new building 'settles down'.
• Damage caused by falling trees and branches during tree felling or lopping.
• Whilst you get cover for damage to the building caused by your aerial or satellite dish falling, it's just the building. The hardware itself is not covered.

Additional accidental damage cover for buildings

What isn't covered in the basic buildings policy is accidental damage. I ran the same test again adding on accidental damage protection for buildings. The cost leapt £66 from £171 to £237.

That's a huge jump considering the extra protection we get is surprisingly little. All of the exclusions in the basic policy will still apply. Plus, although accidental damage is added on, you'll now have a  lot more exclusions to go with it. Typically, even with the extra cover, you won't be protected from:

• Wear and tear.
• Damage caused by pets.
• Damage caused due to maintenance or routine decoration.
• Damage caused when making alterations or extensions to your property.
• Faulty workmanship.

You were already covered under the basic policy if someone, you included, crashed a car into the building. You were already covered if you accidentally damaged your cables, drains and pipes. You were also covered for accidental damage of glass and bathroom fittings.

All this additional cover does is it protect you if you damage the building somehow in some other way. I  have no idea when you might be able to call on this part of the policy. I'm sure there are times, but you must ask yourself if that's worth an extra £66 a year, or £660 over ten years. Are you likely to claim on this? What are your risks?

The basic contents insurance cover

Now we'll look at basic contents insurance, i.e. without the additional accident cover. The list of what is covered and excluded is similar to buildings insurance, so I won't write the same list again. However, an important addition, under a basic contents policy, is that you already get protection for accidental damage to all home entertainment equipment, computers, mirrors and glass.

There are loads of exclusions though. Home entertainment and computer equipment is not covered for accidental damage if it was caused during cleaning, maintaining or repairing, or by pets. Portable equipment like laptops and portable TVs aren't covered if damaged while moving.

Additional cover for accidental damage to contents

Now, we'll add on the additional accidental damage cover for contents. The cost rises sharply again from £171 to £230, so an extra £59pm.

Consider that you already have protection from some accidental damage. As with buildings, damage that was excluded in the basic policy is still excluded even with the additional cover.:

• Wear and tear, and breakdown of items remain excluded.
• Damage caused by pets usually remains excluded from additional damage cover, so check the small print.
• Accidental damage caused during removal is included, but only with removal by professionals. You could always pack and move the most expensive items yourself, as you'll no doubt be more careful than those cowboys, and save on the additional insurance cost.

These exclusions don't leave a great deal that you can claim, except for much more unusual and rare events. If you like moving expensive and fragile furniture around frequently or if you have damage-prone children it might make sense, perhaps. But I think you'll need to consider yourself and your household to be high risk before you add this cover at that price.

Do your own tests

This exercise was just to get you thinking about the costs, because some of you will find better deals, depending on your circumstances. Some will also get a better deal by adding both accidental damage covers at once, or by buying building and contents insurance separately. You should run your own comparisons to see what the best deal for you will be.

Finally, the terms and conditions I'm talking about here are typical, but not everywhere. Although standards are fairly consistent with home insurance, you need to read the small print to see if your insurer is one that deviates from the norm. Read it anyway, as you should understand everything that you're covered for. You may find that price often has little to do with quality. The most expensive policy I found was very similar in quality to a much cheaper policy - but it cost five times as much!

> Compare buildings and contents insurance through lovemoney.com