Whether merely to meet the requirements of your mortgage holder or for your own peace of mind, you are in the market for homeowners insurance, and find that it falls into three categories of possible coverage. These can be purchased as individual products or, in many cases, combined for an overall savings or as a safeguard against disagreements on which insurer must cover different aspects of an overall claim.
Buildings cover: provides security in the event of the worst scenario – total loss of home – and typically sufficient alone for mortgage requirements. Be wary of coverage offered by the mortgage holder, however, as you can possibly save a great deal by looking elsewhere. This type of policy is generally considered a good investment for peace of mind in protecting what will be for the average person the single biggest investment of their lifetime, their primary home. This insurance would protect the actual structure of your home and its fixtures and fittings, like drives and outbuildings, against loss from fire, flood, weather and vandalism. One common mistake, however, is to cover the market value (the amount it could be sold for) rather than the ‘rebuild’ value (the cost of building the home anew, without consideration of location). Providing an alternative residence should be figured in to the policy in the event the home would have to be completely rebuilt. The rebuild value can be established with either a survey or even requesting your insurer provide an estimate based on standard assumptions.
Contents cover: replaces household goods, such as furniture, furnishings, and personal property and would take into consideration theft and, with certain items, accidental damage, as in the case of electrical items. Replacement is typically on a ‘new for old’ basis, meaning the original cost minus any applicable deduction for wear and tear. Insurers can provide an increase in coverage automatically around special events like Christmas holidays to cover the additional items you may have purchased, and even possessions belonging to your children while they are away at university. Indemnity cover can be a less expensive alternative, as it would only cover the current value, rather than the original cost, of possessions, but can obviously leave you short. ‘Bedroom rated’ policies may also be offered for convenience, which automatically determine price by location of the residence and the number of bedrooms – though may not guarantee appropriate coverage.
Valuables and personal possessions cover: for items outside the home like clothing and jewelry. Expensive items such as antiques and collectibles should be valued and listed separately, as their assessment would rise annually. Underinsuring in this area could obviously be disastrous. In addition, various policies could cover items such as wallets and may even provide reimbursement for legal costs in pursuing claims.
In all cases, not only fair price but also quality of customer service must be considered. A solid reputation and the recommendation of family and friends may end up costing a bit more, but when making a claim can prove priceless.