Home insurance, also known as home cover, is a fixed term insurance policy. It is used to insure residential homes against damage but the policy can also include contents, the home being rendered unusable or liability insurance which covers the cost of accidents within the home itself.

While the detail of how premiums are calculated varies from insurer to insurer and product to product, hence the disparity between cost of ASDA Home Insurance and L&G Home Insurance for example. The cost of home insurance is usually based on the rebuild value of the house i.e. what it would cost to replace the building in its entirety. The cost can also be partly dependant on perceived risks to the house, such as its location, the installation of security devices or fire alarms. The repayments, or premiums, are usually made to the insurer on a monthly basis for a fixed period of time.

Some consumers find that their home insurance premiums are very costly, but there are a number of ways to reduce the cost. You can shop around thanks to the vast amount of companies offering home insurance deals; it does seem an impossible and lengthy task. It is then a good idea to contact the insurer, to discuss with them the assessment of their property and discover why the premiums are as they are. You can evaluate the certain elements that increase or decrease the risk-factor and with it cost of premium. It may then be a case of installing burglar alarms, window and door locks or fire alarms, depending on the recommendations of the insurer. The less likely a property is to be damaged or burgled, the less the risk is to the insurer and the premiums reflect the level of that risk.

Premium rates can be flexible. As a result, they tend to take what they are offered. Again discussion, and a degree of bartering with the insurer, can often have an effect on the cost of premiums in favour of the consumer. Increase the payable excess on a policy. The consumer usually has to contribute ?50 to any claim made, but a willingness to pay more can often be beneficial.

Consider carefully whether to claim or not. The decision whether or not to actually make a claim can also affect these costs. A consumer with a history of ?no claims? is more likely to be offered lower premiums than one who has made many. Prudent consumers may actually cover the costs of lesser damages themselves, maintaining their ?no claims? status. This can have a dramatic effect on premiums, as can lifestyle. Surprisingly, some insurers will consider a consumer's lifestyle when assessing their application. Smoking habits, drinking habits and owning a pet can have some impact on an insurer's assessment.

It isn't necessarily a money-saving tip but it can save you from being seriously out of pocket if you need to claim. Conducting an annual inventory, keeping receipts and making sure valuable individual items are covered is recommended. If a claim has not been made, a home insurance policy can usually be cancelled with a full refund. Knowing this, the consumer can ?keep an eye on the market? and switch insurers if a better deal becomes available, without having to wait for their current policy to expire.