In most countries homeowner’s insurance is not compulsory, although if you have a mortgage on your property your lender will usually stipulate that you must have buildings cover in place. If you rent your home then it is the responsibility of your landlord to take out buildings insurance which will pay out if the property is damaged and in need of repair.
Homeowner’s insurance is actually a general term that encompasses two different types of insurance; buildings, and contents. Buildings insurance covers all the permanent fixtures and fittings in your home, such as kitchens and bathrooms, plus structural items such as walls, roofs, and floors, whilst contents insurance is for the items that you keep in your home, but, in theory, could take with you if you were to move out. This would include items such as furniture, televisions, and clothing, for example. If you own your own home then you can buy both these products as a joint policy if you so wish, whereas if you rent you can just purchase contents insurance. Whatever situation you are in it is advisable to take out adequate insurance cover to cover either your property, or its contents.
A buildings insurance policy will cover the cost of repairing your property if it is damaged. However, policies vary in regard to what type of events you are covered for. In general, your insurer will pay out if your home is damaged due to subsidence, falling trees, vandalism, lorry and car collisions, fire, smoke and explosions, water damage from leaking pipes, oil leaking from a heating system, and natural events such as floods and storms. Some policies also cover other structures including outside walls, driveways, and garages.
Make sure that you read the terms and conditions of your policy very carefully as there are also a number of things that buildings insurance will not cover. All policies will not cover you for general wear and tear, and some may not cover you for damage caused by pests (including birds and insects), leaking gutters, and frost (unless this results in damage caused by a leaking pipe). Many policies will also not pay out if you make a claim for loss or damage that takes place if your property is left unoccupied for either thirty or sixty days. If you experience damage to gates and fences due to storms then this is also unlikely to be covered. However, exclusions vary between insurance providers so check what is and isn’t included before you sign up.
If you own a property that you either live in, or rent out, then you need to take out buildings insurance. If you own a flat on a leasehold basis then it is best to seek legal advice to find out if you need to arrange buildings cover.
With regard to contents cover, this type of insurance is not compulsory, although recently it is becoming more common for letting agencies to insist that you take out contents cover when you rent one of their properties. Either way, it is highly advisable that you take out contents insurance as you could be significantly out of pocket if your property was stolen, or damaged.
It can be difficult to figure out exactly how much contents cover you need. You can gain an accurate picture of how much your property is worth by walking around your home and itemising the contents of each room. Do this on a regular basis, usually when your policy is up for renewal, and take out more cover if you have added a few more expensive items to your household.
You can keep the cost of your homeowner’s insurance policies to a minimum by shopping around. Online comparison sites are a great way of finding the best deals, but make sure that you compare policies on a like for like basis, and don’t always assume that the cheapest policy is the best. It can be tempting to add extras to your policy, but to save on costs only add extras that would be really beneficial; accidental damage, or cover for items outside the home are popular add ons that many people find useful. If cost is an important consideration then you can save money by increasing the level of your excess; this is the amount you would have to pay out of your own pocket should you need to make a claim. However, make sure that you set the amount of excess to a price that you can realistically afford.
Before you take out a policy check whether the insurer is prepared to pay out on a new for old basis. This means that if an item you own is damaged or stolen it will be replaced by a new one, regardless of its age. In addition, if you have items that are of a particularly high value you may need to insure them separately.
Homeowner’s insurance offers invaluable protection for both those who rent, and for those who own their own homes. Our homes, and their contents, are usually our most valuable asset so it makes sense to protect them financially. If you are at all unsure about the type of insurance you require then an experienced insurance broker can help you find a suitable policy, at a competitive price.