A Guide to Home Insurance & Saving with Online House Insurance Quotes
House Insurance FAQs
Frequently Asked Questions About House Insurance
What Does an Insurance Broker Do?
An insurance broker, also known as an intermediary, is a person or company regulated by the Financial Services Authority who offers advice to clients and arranges their insurance cover. A broker is generally paid by commission from the insurer. The broker assumes no risk; the risk is assumed by the underwriter.
Where Can I Buy House Insurance?
House insurance quotes can be obtained from a wide variety of sources. It can be bought directly from insurance companies by phone, post or on the internet. But you will also find house insurance is sold by banks, building societies, intermediaries or brokers, mortgage providers, independent financial advisers and more recently even supermarkets as well. In the case of banks the insurance company may be a subsidiary of the bank. Brokers and mortgage providers may offer products based on commercial relationships they have with particular insurance companies.
Getting a House Insurance Quote
An insurance provider should always be registered with the FSA and therefore regulated by the FSA. The insurance provider should make clear whether they are offering advice or information about house and or contents insurance. Furthermore, the insurance provider should outline whose insurance policies they are offering and whether from a single company or many competing insurance companies. When looking for different house insurance quotes remember to always compare like for like - for example, what cover is included; what is excluded; what are the excesses; and, are the limits the same?
Who is my Underwriter?
Insurance can be broadly divided into two principal sectors - general and life insurance. House insurance, also known as household or home insurance, falls into the general insurance bracket. Underwriting is the process by which insurance companies assess risk in order to determine the cost of insurance cover. The term derives from the very earliest days of Lloyds of London when merchant bankers would write their names under the known risk factors faced by sea-going venturers. An individual underwriter working for an insurance company generally specializes in one form of insurance. It is the underwriters's job to assess insurance proposals for risk in order to calculate the premium payable. In practice much of the process of determining house insurance quotes by underwriters is today a more or less automated process.
What is an Insurance Company
Insurance companies have varying corporate structures. Many insurance companies are listed on the London Stock Exchange, the majority of their shares being owned by large institutional shareholders. Some are privately owned companies and a few are mutual societies owned by their members. Each assumes risk according to its underlying asset base. An insurance company may decide that a proportion of their risk should be shared with a re-insurer. Lloyds is an insurance market rather than a company.
What is Reinsurance?
Reinsurance is effectively insurance for your insurance company. An insurance company can limit its potential losses by hedgeing a part of the risk with a reinsurer. In fact, the reinsurer itself may reinsure a part of its own exposure to risk, thereby spreading the risks more widely throughout the insurance marketplace. Insurers calculate the risk outcomes of, for example, natural disasters such as floods or high winds by using complex computer catastrophe modeling programs.
Who Regulates my Insurer?
Companies that sell insurance and those that provide insurance cover (underwriters) are regulated by the Financial Services Authority (FSA). Alternatively they must be the agent of a regulated company. It is straightforward to check whether a firm offering house insurance is listed on the FSA Register; this can be done by simply visiting the website of the FSA. The FSA have a complaints and compensation procedure for resolving disputes with firms entered on their Register.
Do Insurance Companies Fail?
Insurance companies can and do occasionally fail. Insurance company insolvencies may result from several interacting causal factors incuding poor management, bad underwriting decisions, increased competition and declines in the value of underlying investments.
What Happens When an Insurance Company Fails?
Set up under the Financial Services and Markets Act (2000), the Financial Services Compensation Scheme (FSCS) is the "compensation fund of last resort" for customers of insurance companies regulated by the Financial Services Authority (FSA). This role was previously undertaken by the Policyholders Protection Board that levied monies from insurance companies to provide a fund for use in the event of insurance industry insolvencies. The FSCS is similarly funded by insurance industry levies. The maximum level of compensation payable by the FSCS in general insurance claims against an FSA registered firm declared to be "in default" by the FSCS, including house insurance claims, is 100% of the first £2,000 plus 90% of the remainder of the claim. Those are the maximum amounts; the actual amount of compensation would be dependent on the basis of the claim and ultimately on the capacity of the FSCS fund itself to pay compensation up to its stated limits.
How do I Make a Complaint?
Complaints about house insurance should be made direct to the insurance company in writing. If the complaint is not resolved the Financial Ombudsman Service, an independent and impartial body, can be contacted to assist in the resolution of the complaint. Half of all complaints to the Ombudsman are resolved informally and half are resolved within three months. Other cases may require a more formal investigation, report and decision. This service is free to consumers who are under no obligation to accept the Ombudsman's decision, leaving open the possibility of taking legal action. The Office of Fair Trading (OFT) can also assist with general consumer advice. It is important to make any complaint as swiftly as possible as time limits may apply.
Who is the UK's Largest Insurer?
The UK's largest insurer is Aviva, best known for the Norwich Union brand. The second largest is Royal & Sun Alliance (RSA).