That's because basic insurance will often leave out important features such as accidental damage cover or offer lower cover limits.
Yet Which? found that the difference in price between some of these budget options and more comprehensive policies can be as little as £40.
Here, Which? investigates the cost of skimping on home insurance and reveals the top exclusions that might be hidden in the small print of a cheaper policy.
Are budget policies value for money?
When Which? used Compare the Market to search for home insurance deals, it was possible to buy a policy that offers broader cover for just a few more pounds.
We searched for combined buildings and contents cover for a three-bed Victorian terrace house in south London, with no voluntary excess. The five most affordable policies were all in the 'budget' range and priced from £562 a year for Privilege Home Insurance to £746 for MBNA Home Insurance Essentials.
But if you are willing to pay just £41 more, you could get a Privilege Platinum policy for £787 that – unlike the cheaper policies – includes accidental damage cover, as well as legal assistance and home emergency cover as standard. It is also a Which? Best Buy for contents cover.
Top exclusions to watch out for
Home insurance covers a wide range of risks. But it won't pay out for everything and it's important to carefully read your policy document before you buy. That's especially true if you're looking to buy a cheaper policy.
Our latest home insurance analysis examined 75 policies, and 12 of those were identified as 'budget' products. The budget products generally scored poorly and often had gaps in cover that some customers might not realise unless they read the small print.
Here are some of the most common omissions and limits to look for before you buy budget home insurance:
1. Accidental damage protection missing
Accidental damage is defined as a single, one-off incident that could cause unexpected damage to your property or contents. That includes thinks like spilling red wine on the sofa or putting your foot through the wall when making home improvements.
In our customer survey, accidental damage emerged as the most commonly used policy feature, accounting for one in five claims. However, none of the budget policies we analysed include it as standard, nine allow you to buy it as an optional extra and, alarmingly, three don't offer it at all.
2. No damaged or stolen items from the garden
Most home insurance policies will provide cover against loss, damage or theft of things in your garden as standard, although there will be a set limit on the amount it will pay out for garden contents.
Unfortunately, only four of the basic policies we looked at cover for items damaged or stolen while left out in your garden.
Find out more:3. Lack of trace and access
Finding the source of a leak in a house can be an expensive and disruptive process. According to Association of British Insurers (ABI) figures, insurance providers pay out £1.8m every day for damage caused by water leaks.
Trace and access cover can protect you from these costs, but our analysis found two budget products have no trace and access cover. Where the cover is provided, limits are low at typically around £5,000.
4. Missing matching sets cover
Replacement of sets cover – sometimes called matching items cover – protects you if, for example, one of your dining chairs or part of a three-piece suite is damaged. It means that your insurance provider should help replace the complete set if just if one piece is damaged or lost and can’t be replaced like-for-like.
Our analysis found that this was one of the common features missing from from all but one budget policy. While you might not care about this cover if your sofa or dining table is mass produced and bought at a big high street retailer, customers who own expensive, bespoke furniture might struggle to source replacements.
The same applies to people who own lots of rare, expensive jewellery – in these cases, matching sets cover could be invaluable. Importantly, matching sets cover still comes with limits. John Lewis’s Bronze policy, for example, only covers bathroom suites, three-piece suites, kitchen units and carpeting.
5. Less cover for alternative accommodation
If disaster strikes and you home becomes uninhabitable in the short term, most home insurance policies will pay for the cost of your family and pets to stay live somewhere else while repairs are carried out. Events you can claim for include floods, fires, subsidence, storm damage, and burst water pipes.
With some claims taking years to resolve, the bills can be substantial, especially if you live in an area where it’s expensive to rent.
Luckily, most home insurance policies include alternative accommodation covered as standard, but we found almost half of budget policies analysed come with comparatively low alternative accommodation cover.
The average limit in all 74 policies we rated was £144,385, but three of the most basic products will only pay out a maximum of £30,000; two set the limit at just £25,000.
Find out more:6. Higher excess
When you take out an insurance policy, you'll almost always need to set an excess. This is the amount you'll have to pay upfront if you make a claim on your insurance, and it's made up of two parts: 'compulsory' and 'voluntary'. The compulsory excess on a policy is set by the insurer and the level is often steeper for cheaper policies.
For example, we found if you took out the more comprehensive MBNA Plus policy you’d pay excesses of between £50 and £1,000 for escape-of-water claims (such as for burst pipes). But with its Essentials cover, this goes up to £750 to £1,000.
This means picking the basic Essentials option could leave you paying an extra £700. Escape-of-water claims were the second most common kind of claim reported in our customer survey.
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source https://www.which.co.uk/news/article/top-exclusions-to-watch-out-for-when-buying-cheaper-home-insurance-aU3PQ1Z5GYnK