A Guide to Home Insurance

 A Guide to Home Insurance

When considering home insurance it is important to understand the different components, such as buildings insurance and contents insurance. Furthermore, you should know about the levels of cover available to you to help you decide what will best suit your situation.

Guide to Home Insurance

Those eligible for home insurance include:

· Home owners who reside in the specified property.

· Tenants who rent or lease the specified property.

· Owners and occupants of residential apartments.

The terms and conditions of contents insurance normally require that the specified property is occupied solely by the policyholder or holders. It is likely that you will still be eligible for a policy if you share your home with one tenant. However, it is unlikely that you will receive cover if you share your home with more than one tenant or if you let your home.

Home insurance can be broken down into two components, 'buildings insurance' and 'contents insurance'. Generally speaking, buildings insurance covers the cost of rebuilding or repairing your home's structure if it is damaged or destroyed by an event covered by your policy, whereas contents insurance covers the cost of replacing specified goods. Consumers are often required to purchase home insurance as a condition of obtaining their mortgage, however, they are under no obligation to buy it from their mortgage provider.

When choosing home insurance, there are generally two options available. Consumers can choose to specify 'perils', meaning that the policy holder will only be covered for damage caused by those events specified in the contract. Alternatively, choosing the 'accidental damage' option covers consumers against any accidental damage, so long as the damage is not excluded by the policy terms. This highlights the importance of consumers understanding thoroughly the terms of their contract, so as to avoid disappointment and confusion when making a claim.

Which type of cover to choose depends upon the circumstances of the individual. 'Accidental damage' cover is likely to be the more costly, but may be the better choice for those who are more liable to damage and need greater cover, for example people with expensive and fragile possessions. Nevertheless, it remains a strictly individual decision because some 'specified perils' policies include accidental damage cover for certain items too.

Home Insurance related terms explained

Coverage - This is the level of protection provided to you under your insurance policy. Coverage lists the perils, properties, locations etc that you are insured against. For buildings insurance, it is recommended to insure your home for the amount it would cost to rebuild it from scratch, which does not equal its market value. Likewise for contents insurance, it is advisable to insure the contents of your home for the amount it would cost you to repurchase them new.

This is important because if you insure your house for a certain amount, you will not receive any more than that amount should your house be destroyed, even if it would cost more to replace it.

Premium -this is the price of insurance protection for a specified item, building or possession for a given period.

Deductible - This is the amount which needs to be paid before a claim is payable. Once paid, only the amount in excess of the deductible can be claimed.

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