Home Insurance: A Beginner’s Guide

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When some people think of insurance, the image of the sleazy salesman comes to mind. Others think of worst-case scenarios and stressful situations. Despite the negative connotations, insurance doesn’t need to be a daunting topic.

Misconceptions about insurance protection can be eliminated through proper education on the topic. In this blog, we will look at what you need to know about home insurance. Armed with this knowledge, you will be able to better decide on the type of policy may be right for your circumstances.

Why Purchase Insurance

Home insurance protects your home and contents against a wide array of unfortunate events. It also provides peace of mind about the future. Insurance safeguards against the unforeseeable.

For many people, their home is their most valuable asset. It would be a tragedy to lose it simply because of a lack of insurance coverage.

What is Covered?

While policies vary, most cover your property and possessions against theft, vandalism and certain weather conditions (most cover rain and hail damage, which, according to House Hunt, is the most common insurance claim). In the unlikely occurrence that one of these events displaces you from your home, you should also be covered for shelter costs, so hotel stay should be paid for while your home is repaired.

Home insurance also typically provides liability coverage if someone sues you after being injured on your property.

What is Not Covered

Even though home insurance will cover you for a wide variety of things, a standard policy has a list of exclusions. These can include things such as:

  • Earthquakes, sinkholes and landslides
  • War
  • Nuclear Hazard
  • Government action
  • Poor repair, workmanship or detective maintenance
  • Power failure
  • Flooding
  • Certain types of water damage
  • Sewage back up
  • Pests
  • Mould

Many policies allow you to take out additional cover for some of these events (i.e. flooding and earthquake).

Shop Around

It may be tempting to go with the cheapest policy you can find, however that is not necessarily the best decision. In fact, it could end up costing you more money and time down the line.

Cheap policies have low price tags because they often do not give home owners the best service if you were to incur loss. They also only pay for the depreciated value of the item instead of the replacement cost (this means they will pay the current market value of the item, which may have decreased through age and wear).

Having a policy that covers the replacement cost of your home and its belongings is very important, as it will prevent you from paying out of pocket expenses.

Shop around and ask for multiple quotes before settling on a policy.

Getting a Good Agent

A good insurance agent is just as important as selecting the right policy. These agents are experts who can help recommend the best cover and provider for you--they will take into account aspects such as the financial health of the insurance company in order to make sure they will still be around to cover your claims. They are also your go-to between the providers and will be able to help process your claim.

How to Pick an Agent
It can be helpful to pick an agent that has received good feedback from previous customers. Ask around to see if anyone you know can recommend an agent. When contacting potential agents, you can ask them for references. Another option is to go online and see what feedback people have given.

Do’s & Don’ts

Some providers will offer you home insurance as a package deal with other insurance policies. It may seem attractive, because it is both cheaper and more convenient, but it may not always be the wisest choice. Home insurance is vastly different from car insurance and it’s important to make sure you are covered you properly for each type of insurance.

It is worth checking with your agent/provider to see you are eligible for a special rate. You might be able to get a discount due to your age, good credit or house features (i.e. security system).

Contact your provider about any changes that are made to the home. Keep them updated about any projects or maintenance, as it can affect your premium as well as terms and conditions.

If something does happen, document the damage immediately with a photograph or video. This will save you from having trouble with the damage in the future. It will also clearly show the extent of damage immediately following the event.

With most home insurance policies, items like electronics and jewellery are not covered. It is worth taking out additional cover for these items, as they are some of the most common content claims (especially jewellery).

Insurance can be a tricky topic to grasp, but it is important to have an understanding of the options available to you. If you would like further information on insurance policies or would like help choosing a policy, please contact us!

**The information provided here is general advice only and your personal circumstances have not been taken in to consideration during its preparation. You should seek independent advice before making any decisions relating to your personal finances and insurances.