Insuring your home is not just a prudent step to protect it for the sake of your own finances, but may also be a requirement of securing a mortgage from certain lenders, even though you are not legally bound to do so as the owner of property.
Of course there are a multitude of homeowner’s insurance deals out there, and picking the right one will save you money and sidestep a lot of stress as well. Here is a look at why this is the case, and why selecting an unsuitable policy could be disastrous.
Not every incident is covered
The most important step you can take when comparing homeowner’s insurance is to read the small print and find out exactly what kinds of circumstances are protected against by the policy, and which are conversely not covered.
This is significant because lots of homeowners only find out that their chosen package lacks a certain type of cover when they go to make a claim, at which point they may not be in a position to pay for repairs themselves and could be left in an even worse position. Likewise, premiums can be impacted by your claims history, just as current mortgage interest rates tell only part of the story when it comes to loan affordability, so considering your current circumstances is necessary.
First and foremost it is worth establishing that there are plenty of standard inclusions in most home insurance policies which will be pretty consistently covered across the board. You should be able to make a claim if your home is damaged in a fire, compromised by vandalism or impacted by an explosion from a gas leak, for example.
At the other end of the spectrum there are things like damage caused by floods and earthquakes which are not typically covered by basic policies. If you live in an area that is susceptible to such natural disasters and other extreme types of weather, then spending more for additional insurance is a good idea.
Insufficient contents cover can be an issue
Along with protecting you in the event of damage occurring to your property, an entry level homeowner’s insurance policy will also cover your possessions, with things like accidental damage and theft insurance usually applied to the contents of your home.
This is all well and good, but could come back to bite you if you do not take into account individual items which are especially valuable and which, as a result of their worth, might not be eligible for a claim if they are damaged or stolen under the terms of your policy.
Likewise if you underestimate the collective value of the contents of your home, or overestimate it, you might either not be able to claim back the full amount needed to replace these items, or just end up paying over the odds for your insurance unnecessarily in the latter case.
Liability cover is a sticking point
Finally, you should think about the kind of liability coverage which is provided as part of the homeowner’s insurance deal you sign up to, because failing to do so could leave you in financial dire straits.
In short, if a third party is injured on your premises, you could be liable to cover the costs of their treatment and any other expenses they incur as a result unless you are adequately insured.
Standard homeowner’s insurance policies should give you enough cover in most cases, but if you work from home or run a business on the same premises at your residence, then getting business liability insurance could be sensible as well.
Do not rush into the act of choosing insurance for your home, as seemingly minor details can make a big difference in the long run.