A new home insurance policy from the AA aims to overcome homeowner concerns about what may be covered by their policy.
While many low-cost home insurance policies exclude benefits that are sold separately, or might not be discovered until a claim is made, Home Insurance Plus offers unlimited cover for both buildings and contents, as well as increased cover for personal possessions when away from home.
Home Insurance Plus reflects an earlier age when home policies covered 'all risks' – embracing for example accidental damage, home legal expenses or matching sets (such as three-piece suites or bathroom sets), which were once included in standard home insurance policies but are now usually offered as optional extras or not at all.
The new Defaqto five-star-rated policy fills a gap between the AA's standard home and buildings products and high-net-worth policies.1
Simon Douglas, director of AA Insurance, says: "A focus on price can lead householders to purchase policies that may have several exclusions, which could lead to an unexpected denial of a claim if they don't buy them as optional extras.
"I believe there is a place once again for comprehensive cover, and efficient and prompt settlement of legitimate claims, offering value for money rather than the cheapest premium.
"If you like, it goes back to traditional insurance values."
Customers don't have to go through the process of assessing the value of their contents, as there is no upper limit in the event of a total loss... It also means customers cannot be 'underinsured'
Simon Douglas, director of AA Insurance
The AA Home Insurance Plus policy includes cover for accidental damage, valuables away from the home, home emergencies and legal protection. A claim for damage to one part of a matching set, such as bathroom fittings or a three-piece suite, is also covered. So for a bathroom fitting, the whole set will be replaced if the colour scheme is no longer available, rather than just the damaged item.
It is also a 'bedroom-rated' policy, which means that the premium is based on the number of bedrooms a property has.
Other benefits include high limits for valuables, £50,000 cover for temporary accommodation if needed, cover for student possessions when away from home, and unlimited cover for replacement keys and locks following loss or theft.
Explains Mr Douglas: "Customers don't have to go through the process of assessing the value of their contents, as there is no upper limit in the event of a total loss, although they are asked to specify an approximate band of contents value.
"It also means customers cannot be 'underinsured' – where a large claim might be adjusted downwards if a claims assessor considers that the contents are insured for less than their replacement value. Research suggests 1 in 5 homes has no contents insurance,2 and of those that do 1 in 4 is underinsured."3
Mr Douglas says the new policy will suit those who have higher than average values for their buildings and possessions, but for whom a high-net-worth policy isn't justified.
As a leading home insurance broker, the AA will look for the cheapest premium for this policy from its panel of home insurers.
"The best option could be buildings and contents from different insurers, or a combined policy from one. But as this is an AA-designed policy the specification, terms and conditions are identical regardless of who underwrites it."
1 Defaqto is an independent, financial research company that specialises in rating, comparing and analysing financial products. AA Home Insurance Plus is among the top quartile of five-star home insurance policies.
2 Joseph Rowntree Foundation (not dated).
30 April 2014