March Newsletter

Welcome to our March newsletter. In this issue we have home insurance as product of the month. 15 ways you could be invalidating your insurance. Eight questions every first-time buyer must ask when buying a flat and how much you should be saving towards your retirement.

Product of the Month

Home Insurance.

We compare the market so you don’t have to saving you time and money. We use many of the UK’s leading insurance companies and have arranged special deals you won’t find anywhere else on the internet.

We offer a personal service so you will always be able to talk to us should you require help or assistance in anyway. Our aim is to give you the most appropriate policy at the best possible price.

We want to take the hassle out of buying household insurance.

Generous No Claims Discount
Buildings Insurance
Contents Insurance
Installments available
All Risk Items
Legal Expenses available with identity theft protection
24 hour claim lines
You may be interested in our home worker insurance policy

15 ways you're invalidating your insurance

Buying insurance means buying peace of mind. If anything unexpected happens to rock your finances or your family, you at least know that there’s a certain amount of protection in place to help you pick up the pieces again afterwards.

It’s the bill you pay for a service you hope you never have to use. When you do need to turn to it, you need to know you can trust the insurer to pay out quickly and without trying to find a way out.

Yet insurers are well within their rights to declare a policy invalid if you have failed to keep up your end of the deal.

And you might be surprised at just how many commonplace things you can do that mean you breach that contract and risk invalidating your cover.

So, from drinking too much by the pool to forgetting to mention your pricey jewellery, here are some of the mundane, easy mistakes you might make that could result in a financial disaster.

Home insurance

Arguably one of the most important insurance policies there is, but it’s all too easy to break your conditions if you don’t take the time to read the small print. Here are some ways you can wreck your cover.

Underestimating your value

Around 11 million UK households are not confident that they have valued their possessions correctly for home insurance or they have no insurance at all, according to the latest report from A-Plan Insurance.

It also found that 44 per cent of contents-insurance customers had not reviewed the high-value items they had in their home for the last five years, potentially leaving them dangerously underinsured.

Giving a value that is too low doesn’t just mean you can’t claim the full value back, it can have an even greater impact on your payout.

For example, if your possessions are worth £40,000 but you have only insured £20,000, that does not mean you’d receive up to £20,000 if you had to claim. Many insurers would say that you only insured half your belongings and would therefore only pay out half.

So if you had to make a claim for £10,000 worth of damage but then the insurer discovered you had underestimated the total value of your possessions, they might only pay out £5,000 because you only had half the required cover.

DIY done badly

If you undertake a spot of DIY but you cause some serious damage, for example by drilling through a water pipe, you may not be covered.

Not every insurer pays out for home improvement catastrophes, so it’s a good idea to find out if they do before you get too drill-happy.

Leaving the keys for a friend

Many people will hide their keys on the property so that a cleaner or dog walker or plant waterer can get in. But if a burglar lets themselves in with keys that you left unsecured then your insurer may well refuse to foot the bill.

Failing to activate your alarm

Your insurance may reduce in cost if you have a burglar alarm or particularly good locks but that’s for a reason – it makes you less of a risk.

It’s really important to understand exactly when your insurer expects you to activate any security systems so that you don’t risk finding your cover is invalidated because you didn’t.

Read the insurance documents. They may be dull but being bored is better than being broke.

Car insurance

You need to know what is expected of you to ensure your insurance will pay out. Some of your insurers’ expectations may be less obvious than others.

Modifying your vehicle

Whether it’s blacked out windows or new suspension, you need to let your insurer know about any changes you make to the vehicle – even if they are just cosmetic.

If you don’t then you could risk voiding your insurance entirely.

Being economical with the truth

What do you use your car for and does your insurer know? If you’ve said you use it for personal use only but actually you’re using it for business then this could leave you uninsured.

If you’ve claimed someone else is the main driver to bring down the cost of cover, when actually you are the main user then you could invalidate your cover. That’s called “fronting” and insurers are really clamping down on it.

Maybe you’ve said you typically do 6,000 miles but actually it’s 12,000 miles. Trying to save money by misleading the insurer just means you risk being left without cover when it really matters – when you make a claim.

That’s a very expensive way to save money.

Failing to protect your keys

We’ve all seen news stories of people leaving their engines running so their car defrosts, only for a thief to make off with their vehicle.

One of the worst things about those thefts is that the driver’s insurance is very unlikely to pay out. Keeping your keys secure is a common requirement of car insurance so don’t risk your cover for the convenience of leaving your keys in the ignition.

Changing your job

Insurers price up car insurance based on risk and part of your risk is determined by your job. That’s why you have to state what you do on your application and why it can make a difference to your premiums.

So if you change jobs then it’s really important to let your insurer know or you could risk invalidating your cover.

Not cleaning your windscreen

If you’ve left frost or mud all over your windscreen you could be in trouble. Not only might the police issue you with a fine, but if you have an accident and your car is deemed to be in a dangerous condition then your policy could be invalidated.

Not using your garage

If you have told your insurer that you are parking your car in a garage then you really need to do so.

Parking on the street if you’ve stated that you’re using a garage or drive could leave you in difficulties if you need to make a claim.

Volunteering your wheels

If you’re part of a volunteer organisation like a youth group and you’re regularly using your vehicle to give lifts and transport other volunteers then it’s a good idea to mention it to your insurer and make sure you’re still covered.

Travel insurance

Not locking away your valuables

Many travel insurance policies will refuse to pay out if the insurer thinks you’ve failed to secure your property.

For example, if valuables are left unattended in your room and you haven’t secured them in a safe or deposit box then you may find you can’t claim if they go missing.

Doing something fun but dangerous

A holiday might be a great time to try new things but you may want to be sure that your insurance will protect you if you undertake them. Activities like skiing and other winter sports are not typically covered by travel insurance and you will need to upgrade to a policy that does.

Many insurers won’t protect activities like bungee jumping or jetskiing. Even activities like riding on a camel may not be insured by your policy so it’s essential you read the limitations before you decide that you really want to try a trek on an exotic animal.

Not getting your shots

Your travel insurance will protect you from the cost of needing medical treatment when you’re overseas but you still need to take steps to protect yourself.

That means getting the vaccinations you’re due before you travel. For now, before Brexit at least, it also means getting a European Health Insurance Card (for free) that entitles you to the same treatment within the EU that locals get.

Many insurers require you to have that and then they cover any additional medical costs.

Having a few too many

Relaxing on holiday is one thing but getting dangerously drunk or taking illegal drugs can be an easy way to invalidate your cover and increase the chances you’ll need it.

Eight questions every first-time buyer must ask when buying a flat

Buyer beware! Eight questions every first-time buyer must ask before they buy a flat - from what they can borrow, to leasehold and ground rent traps

When you're buying your first home, it's tempting to get swept up in the excitement and spend your time looking at new curtain fabrics rather than the nitty gritty of the process.

But there are some key aspects of buying a property that need to be addressed if you're going to avoid some of the common pitfalls of moving into your first home.

This is particularly true if you're a first-time buyer who is buying a flat as it is likely to be the first time that you're exposed to issues such ground rent - which can double in as little as a decade depending on the clause in your lease.

Issues around ground rents have led to families being stuck in toxic leasehold deals, something that has been highlighted in a Government report issued today.

Flats can come in all shapes and sizes, including a converted period property

These families bought leasehold houses rather than flats, but there have been calls for a complete overhaul of the entire leasehold system - including flats.

The House of Commons housing committee says there is no excuse for not helping the estimated 100,000 victims of the scandal.

Government figures suggest there are 4.2 million leasehold properties in England.

Here, we look at some of the most important questions you need to ask as you start out on your journey to buying a flat.

1. What's your budget?

You'd be surprised about how many first-time buyers will look at a flat and then decide on their budget rather than the other way around.

With restricted knowledge about their budget, these buyers will start looking through property listings around the price they think they can afford and then become disheartened when they later find out that they're way off the mark.

And don't forget to factor in additional costs to the price of the property, such as stamp duty and legal fees.

2. Have you got your mortgage approved?

To ensure that you don't become emotionally - and potentially financially - involved in buying a property that you cannot afford, make sure that you have the finance in place first.

Admittedly, obtaining a mortgage may not appear to be the most exciting of tasks, but it is essentially to ensure you don't trip up along the way.

The maximum you can afford will depend on a number of factors, such as your deposit and annual salary.

The majority of lenders will allow a maximum mortgage amount of 4.5 times your annual income, but will also factor into your spending and debt, and so it could be significantly less.

3. Will you be able to afford the monthly mortgage payments?

During the process of obtaining a mortgage, you will find out how much your monthly repayments are.

There is a responsibility on your lender to ensure that you can afford it before approving any deal, even if the Bank of England increases interest rates from their current level of only 0.75 per cent.

However, you may decide that you would rather not pay the amount stipulated - for example, it may be significantly more than you are currently spending on renting.

But you will only be able to make this decision once you know how much your new home will cost you every month.

The service management charge covers the costs of services provided to the communal areas

4. How long is left on the lease?

If you're buying a flat, the chances are that it is a leasehold property. This is where you lease the property from the freeholder to use the home for a number of years.

Leases tend to be long term, often 125 years - and even as high as 999 years.

However, it is important to check the exact term remaining as banks and building societies tend not to lend on properties with a lease of less than 70 years.

Also bare this in mind when you come to sell in the future.

A good solicitor will be worth their weight in gold, with the length of the lease being one of things they highlight.

5. Who is the freeholder?

This one is tempting to overlook, but it can have far reaching consequences depending on who it is.

For example, if it's a big company, do they have a hands-on approach and what is their track record with dealing with leaseholders?

Alternatively, a freeholder who is a one-man band may be so distant that they cannot be contacted if there are any issues.

Whoever it is, it is worth doing some research, such as on social media to see what other leaseholders have to say about them.

6. Do you contact the estate agent via email?

It is worth putting as much as possible of your communications with the estate agent on email, as opposed to discussing everything by phone.

This will provide you with a trail of questions and answers that you can refer back to if you forget any information about the property.

7. What is the service management charge?

If you are looking to buy a flat, there will be a service management charge to cover the costs of the services provided to the communal areas.

These services can include everything from garden landscaping to building insurance.

The charge is paid by the leaseholders to the freeholder (or the property management company that is party to the lease) and can vary considerably depending on the building.

It is important that you know how much the charge is a month so that it doesn't catch you out with your monthly budget.

There can also be large bills for unexpected structural issues.

8. What is the ground rent?

Similarly, it is important to know how much the ground rent will be and how much this will increase in the future.

Ground rent covers the 'rent' paid under the terms of a lease by the owner of a building to the owner of the land on which it is built.

Some properties have a peppercorn rent of perhaps only £100 a year, while others are required much more. The rent can also increase over time.

For example, a lease can stipulate that it increases 700 per cent every 21 years, which is a large jump from the £100 a year, if that is the amount currently paid.

How much you should already have saved for retirement – you're probably about 60 per cent short

It’s not sexy or fun and it won’t increase your vital stats on social media.

But if you want to be sure of living out your twilight years without constantly worrying about money, it’s a must.

The problem is that most of us haven’t got a clue how much we need or how we’re going to do it.

The latest terrifying figures seen exclusively by The Independent show, for example, that Generation X needs to have already saved £187,400 by today to retire on an income of £19,000 a year.

Nationwide, that would give them just enough cash for general living costs, one long-haul holiday and, if they’re lucky, a new car every five years unless they lived in London, where it wouldn’t even cover the basics.

Millennials in their twenties and thirties, meanwhile, should have £73,500 slotted away if they want to achieve a stress-free old age.

Even 24-year-olds with an average of just a year in the workplace would already need to have saved £7,348, regardless of what else they’re paying off or saving for, according to financial adviser Salisbury House Wealth.

And by the time we hit 65, having ideally saved that £7,348 every single year over a 42-year career, we should have more than £308,000 to fund that £19,000 income.

In total, assuming inflation of 2.5 per cent, the adviser suggests we need a savings pot worth £323,000.

How do your savings shape up?

Check your age against the amount you need to have saved by now to see if you’re on track.

Age	Annual income needed in retirement	Amount needed in retirement (with retirement age of 67 and life expectancy of 82)	Amount needed in retirement with an assumed long term inflation rate of 2.5%	Amount to be saved each year (assuming start at 23 and finish at 67)	Number of years saving so far	Amount needed by 2019
24	£19,000	£266,000	£323,300	£7,348	1	£7,348
25	£19,000	£266,000	£323,300	£7,348	2	£14,695
26	£19,000	£266,000	£323,300	£7,348	3	£22,043
27	£19,000	£266,000	£323,300	£7,348	4	£29,391
28	£19,000	£266,000	£323,300	£7,348	5	£36,739
29	£19,000	£266,000	£323,300	£7,348	6	£44,086
30	£19,000	£266,000	£323,300	£7,348	7	£51,434
31	£19,000	£266,000	£323,300	£7,348	8	£58,782
32	£19,000	£266,000	£323,300	£7,348	9	£66,129
33	£19,000	£266,000	£323,300	£7,348	10	£73,477
34	£19,000	£266,000	£323,300	£7,348	11	£80,825
35	£19,000	£266,000	£323,300	£7,348	12	£88,173
36	£19,000	£266,000	£323,300	£7,348	13	£95,520
37	£19,000	£266,000	£323,300	£7,348	14	£102,868
38	£19,000	£266,000	£323,300	£7,348	15	£110,216
39	£19,000	£266,000	£323,300	£7,348	16	£117,564
40	£19,000	£266,000	£323,300	£7,348	17	£124,911
41	£19,000	£266,000	£323,300	£7,348	18	£132,259
42	£19,000	£266,000	£323,300	£7,348	19	£139,607
43	£19,000	£266,000	£323,300	£7,348	20	£146,950
44	£19,000	£266,000	£323,300	£7,348	21	£154,300
45	£19,000	£266,000	£323,300	£7,348	22	£161,650
46	£19,000	£266,000	£323,300	£7,348	23	£168,990
47	£19,000	£266,000	£323,300	£7,348	24	£176,350
48	£19,000	£266,000	£323,300	£7,348	25	£183,690
49	£19,000	£266,000	£323,300	£7,348	26	£191,040
50	£19,000	£266,000	£323,300	£7,348	27	£198,390
51	£19,000	£266,000	£323,300	£7,348	28	£205,740
52	£19,000	£266,000	£323,300	£7,348	29	£213,080
53	£19,000	£266,000	£323,300	£7,348	30	£220,430
54	£19,000	£266,000	£323,300	£7,348	31	£227,780
55	£19,000	£266,000	£323,300	£7,348	32	£235,130
56	£19,000	£266,000	£323,300	£7,348	33	£242,480
57	£19,000	£266,000	£323,300	£7,348	34	£249,830
58	£19,000	£266,000	£323,300	£7,348	35	£257,180
59	£19,000	£266,000	£323,300	£7,348	36	£264,530
60	£19,000	£266,000	£323,300	£7,348	37	£271,880
61	£19,000	£266,000	£323,300	£7,348	38	£279,230
62	£19,000	£266,000	£323,300	£7,348	39	£286,580
63	£19,000	£266,000	£323,300	£7,348	40	£293,930
64	£19,000	£266,000	£323,300	£7,348	41	£301,280
65	£19,000	£266,000	£323,300	£7,348	42	£308,630

Source: Salisbury House Wealth

The truth is that any contribution will help, especially as the state pension age continues to increase.

Tim Holmes, managing director at Salisbury House Wealth, says: “There is a big gap between what individuals need to have saved into their pension pot by this point and what they actually have.”

“When you start saving is just as important as how much you save each year.”

“In order to have saved enough by your mid-fifties, you need to start saving early. Incrementally building a private pension pot and investing with a sensible long term outlook will take you a long way to having the buffer you need when you finally reach retirement age.”

“The question that needs to be asked is whether you want to just survive in retirement or actually enjoy it.”

Trying to anticipate the answer, the government launched the ground-breaking workplace pension which this month has automatically enrolled 10 million savers.

“Getting 10 million more people to save for their retirement is an astonishing success,” says Tom McPhail, head of policy at Hargreaves Lansdown.

“Everyone who is now a member of a workplace pension is taking steps towards a more prosperous and better-funded retirement. The fact so few have opted out so far is testament to the effectiveness of this nudge; most people knew they needed to do this and are just glad someone has helped them make it happen.”

But if, on average, we’re still under-saving so significantly there are clearly still significant problems. The fundamental issue is one of engagement. We don’t really pay attention until we start to build up an amount that means something.

Studies show that once we’ve saved £5,000 the money suddenly becomes a little more interesting and we start becoming more interested in where the money is invested, how it performs and how to make it bigger, including saving more each month.

And we’ll need to. Despite contribution rates set to rise again in April to at least 3 per cent for employers and 5 per cent for employees, it still won’t be enough for most people.

“The pensions industry keeps demanding the government increase the statutory minimum contributions but they’re barking up the wrong tree,” argues McPhail.

“The answer to getting contribution rates up to an adequate, or even a good level lies in engaging members to make individual choices about how much they should be saving. It also lies in encouraging them to take control of their investment choices so they can make the most of the money they do save. For many pension scheme members, the default fund is not the best answer.

So those enrolled in the workplace pension can’t afford to sit back on their laurels just yet.

But there are still another 9 million working adults who aren’t enrolled in the workplace pension, usually because they’re self-employed, too young (the qualifying age is currently 22 though it is likely to reduce to 18 in the mid-2020s), or they don’t earn enough from a single employment to be eligible. The lower income threshold is currently £10,000 though again, there are vague promises to scrap it completely at some point in the next few years.

Meanwhile there are millions of small “dormant” pension pots, caused when someone leaves a job and their retirement savings are left behind in their former employer’s pension scheme.

Multiplied out over people’s working lives and exacerbated by auto-enrolment, there is a risk of billions of pounds going to waste.

“Perhaps the biggest and most important challenge is to turn disengaged pension scheme members who have been auto-enrolled into active investors who can make sensible choices about what to do with their money,” adds McPhail.