Buying a home with bank finance, typically this will be a mortgage on the property, tends to mean that most of the risk is carried by the lender and they will require security and protection of the asset so that their investment is guaranteed.

They can’t control market fluctuations, but they can dictate that you take out a homeowners insurance policy so that in the event of the house being damaged or destroyed they get their money back. The lender may even insist that the policy is taken out by them, but you pay the premium, though in most cases they will only insist that your homeowners policy lists them as preferred beneficiary.

You’ll be asked to insure the dwelling, this is the actual building you live in and is most often going to be the most valuable building on the land. You should be aware that some policies will exclude a separate garage or workshop and if you need coverage for these talk to your lender or insurance broker before agreeing to the policy.

The amount you pay in premium for dwelling coverage is determined by the replacement cost of the building taking into account the area of the home, materials used in its construction, and the year of construction which might increase the risk of damage from natural hazards. An older structure may not be earthquake proof for example, or may not be fully compliant with the latest building regulations.

Remember that most insurance companies use risk assessment as a core part of their pricing model, so a building that is older or doesn’t comply with the latest regulations will most likely be considered higher risk, thus resulting in higher premium being charged.

Be aware of the excess (also known as the deductible) you will need to pay in the event of making a claim against your homeowners insurance policy. Unlike car insurance, you are unlikely to have an excess of only a few hundred dollars, it is more likely the excess fee will be in the low thousands.

It is advisable to know what your excess will be in the event of your home being damaged or destroyed because you will be expected to pay the excess, and if you don’t have funds available you might find your insurer refuses to accept your claim. It’s easy to think the lender would be on your side if your insurer refuses to accept your claim, but in fact this might not be the case and you may instead find yourself in litigation with your lender since they may not be a party to the insurance policy other than as beneficiary.

Be aware also that there are two types of excess for homeowners insurance, fixed amount, or percentage. In volatile markets it might be more common to be offered a percentage excess, meaning that as the value of your property increases, so too will your excess. It isn’t unheard of for properties to see increases of 100% or 200% over a few years, especially if you renovate.

The author has studied insurance for several years and written extensively on consumer websites. You can read more of his insurance articles on Save Insurance, for example where he writes about the term insurance rate

Marks & Spencer have this week announced a move into the energy market as part of a new deal with Scottish & Southern Energy. Apparently, customers will now be able to buy gas and electricity in their shops and on their web site and earn rewards for signing up, renewing contracts and, perhaps more importantly, for cutting consumption.

M&S claim that their energy prices will be competitive, at around £1,196 per year for an average user, and the same as existing SSE customers who buy dual fuel by direct debit.

M&S Energy customers will get a £15 voucher if they reduce their annual energy usage by 10% and another £10 voucher if they opt for paperless billing. Those who switch to M&S Energy ‘Dual-fuel’ also receive a £20 M&S voucher on sign-up and an extra £10 voucher for each year they remain with M&S Energy. The deal will be launched on October 27th on the M&S web site and available through its network of stores by the end of November.

Some would say that the energy market is already complicated enough without major high street retailers jumping on the bandwagon. There’s a plethora of suppliers to choose from and each has its own bewildering array of promotional offers, incentives and discounts to baffle new and existing customers with. However, M&S have a world-class brand, a reputation for quality and a loyal and trusting customer base to leverage and I suppose selling energy is no worse an idea than Tesco selling car insurance or John Lewis selling holidays.

But where does this relentless drive for diversification end? M&S cars? M&S mobile phones? M&S stair lifts? The retailer is already selling electrical goods and furniture and this new energy deal is part of an ongoing initiative to expand into a wider range of goods and services.

Clearly, we are living through troubled times and high street retailers are under increasing pressure to innovate their way out of the current downturn in sales and the inevitable slump in profits. M&S also face increasingly difficult trading conditions and they have fallen from grace with the City since those heady days of £7.50p per share valuations just last year. Their current share price of £2 speaks volumes about investors’ opinions on their short to medium-term prospects!

Utility companies tend to have much more of a charmed, ‘dull-but-steady’ existence, fairing well through the tougher trading periods but, conversely, fairly unexciting through the good times too. SSE, one of the ‘big six’ domestic energy suppliers with around 8.5 million customers, will want to use this new link with M&S to reach additional customers and grow its market share. M&S will be happy to have the new revenue stream to hopefully prop up losses in some of its more ‘sensitive’ product lines.

So, it may have all the makings of being a sensible deal for both parties but what about the poor consumer? Will M&S customers be getting a great deal? Would they be better off than buying direct from energy suppliers in the open market? Only time will tell but I doubt it.

I don’t think a few vouchers could ever persuade me to stick with just one energy supplier purely because M&S choose to recommend them. However much I like M&S as a purveyor of good food, boxer shorts and socks, I won’t be fooled into trusting them to supply my every need! There are far too many deals and incentives in the energy market that make it more lucrative to regularly switch my supplier to save money. The vouchers simply don’t compensate for the potential savings lost. However, if M&S ever get the confidence to guarantee the best prices in the marketplace and they promise to take the leg work out of constantly switching supplier for me… then I might just reconsider.

Article by Alan Potts

Gas Boiler reviews and ALL you need to know about home heating, gas boilers and home energy supply from BUYability Limited CEO: Alan Potts.