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Home Insurance Explained
A person's home is normally the biggest investment they will ever make, and the contents within the home are both sentimentally and intrinsically valuable. A home policy covers the actual home and agreed contents value in many cases of damage such as fire, storm (more discussed below).
It is typically made up of both buildings and contents insurance. Buildings insurance covers the property and contents insurance covers the items contained within the property.
Who is a potential candidate ?
If the property you own is used for investment purposes, then you only need to have building insurance. Contents cover is at the discretion of the tenant. As a minimum, if you have a mortgage secured against the property will be legally required to take out buildings cover. If you want to protect the value of your contents, you will take out the contents extras as well.
What typically does it cover?
Home policies will typically cover damage caused to your property and contents caused by fire, storm damage, faults such as burst water pipes or a third party during burglary. Even uncommon events like hailstorms, explosions and damage from vehicles are normally covered by a standard home insurance policy.
In terms of the scope of the policy, damage caused to the garden, any additional structure on the property like a garage, shed or conservatory is also covered.
What typically does it not cover?
Home policies vary widely between providers so check the exclusions to each quote you receive. Typical exclusions include subsidence, acts of war, flooding in flood areas and wind damage in hurricane areas.
There are four areas that policyholders assume are included but typically aren't:
- Damage caused to your home by an infestation will not be covered. This is seen by the insurance company as a long-term duty of care issue and as preventable by the home inhabitants.
- Extended periods of time when the property is vacated may also not be covered and a specific vacant property inclusion should be considered.
- Many people now have home offices but don't think that your home office equipment is covered by your contents insurance. You will need to take out a separate business insurance policy for that.
- Flooding - often the wording on flood policies may not cover flash floods or have specific definitions ruling out cover from more common river flooding.
Additional coverage that policy holders might take out in this area
As suggested, if you have a home office and you wish to protect it, you will need to take out a business policy that covers home office equipment. Even if you have vehicles parked in your garage, these are not covered by your home insurance and will need separate insurance to cover these. You may also need separate coverage for individual items about a certain amount. For instance, works of art of a high value may need to be insured separately.
You can get covered to the highest degree possible including coverage against nuclear war, environmental pollution and even religious phenomenon. However, the more inclusions you sign up to the higher your premium will be. Your decision should be based on how much cover you will need.
What will it cost?
The price is calculated by the amount of cover needed, the value of your home and how the broad the policy is. As a minimum you will be paying $1000 per year. The cost can, and does, vary wildly depending on the level of coverage you take. With property prices going up globally, prices will also rise at the same level.
Free Home and Contents Policy Quotes
Find out where to get a free home insurance quote here.
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