Getting the Most from Home Insurance
Taking out home insurance is a requirement of most lenders, but it pays to become familiar with the fine print before you choose a policy.
If your home is burgled and your electronic gear is stolen, did you know there is probably a cap on how much you can claim. If your child accidently lobs a ball through the kitchen window, you might not be covered for broken glass. If your property is burnt down, the cost of temporary accommodation might be taken out of the amount you insured your home for.
A good place to start is by understanding the difference between 'total replacement' cover and 'sum insured' cover. Total replacement cover typically has the highest premium and includes all the costs to rebuild your home to the standard it was prior to an event. 'Sum insured' will cover you up to a set amount that you have selected. Check whether your insurer increases the sum-insured each year or offers additional coverage to account for projected rebuilding cost increases.
Don't risk being left under-insured because you haven't accurately calculated the rebuilding cost or made inaccurate representations about your building. To check rebuilding costs, use the web calculators offered by many insurers or obtain advice from a builder. If you have renovated your property since your policy was taken out, update your insurance to reflect its improved value.
The same rules apply for 'contents' insurance. Each year, before you renew your policy, review the replacement value of your contents and adjust your cover accordingly. Walk through each room, listing all your belongings and how much it would cost to replace them. Keep receipts as you may be required to provide evidence of value.
The type of contents cover you choose will affect the premium you pay: some policies will cover the value of your possessions while others will replace them with new items ('new' for 'old'). It is unlikely that your policy will cover every loss situation so be aware of common exclusions like 'accidental damage', 'antiques and collectables', 'lack of property maintenance'.
Most contents policies set limits for items like jewellery, artwork and electronics, which means that if you have a specific asset worth more than the standard limit then a capped policy won't replace them unless you insure these items separately.
Want to know more about home insurance? Let us know and we'll point you in the right direction.