Most people work really hard for their home and everything in it, and it can take many years to build up your home from scratch. However, like anything else in life, your property and everything in it is at risk from dangers that are often beyond your control, and this could easily wipe out everything you have spent years working hard for.
Although you may not be able to totally eliminate the risk of unforeseeable dangers to your home, you can eliminate the financial risks involved by taking out homeowner insurance coverage.
Homeowner Insurance Coverage
This coverage offers invaluable peace of mind to any homeowner, and will enable you to pick up the pieces and recoup financial losses in the event that your home and belongings are damaged or even destroyed. When you take out your insurance, you should ensure that you are providing yourself with adequate coverage to cover the value of everything you own in your home and, of course, your home itself.
Depending on what type of damage your home incurs, you could find yourself and your family have no place to stay for a while. For instance, if your home has been contaminated or there is a fire, you may find that you have to find alternative accommodation whilst the problem is being sorted out. Some insurance policies will foot the bill for hotel or alternative accommodation whilst your home is being repaired. This is in addition to the valuable cover provided on your home and belongings.
Estimate your Home’s Worth
When you take out home insurance, you should first get an idea of what your actual home is worth. You can do this by getting a valuation on the property or by working out how much it would cost to replace the home at current prices. You also need to take an inventory of your belongings and keep this somewhere safe. This will enable you to put an approximate value on your belongings and may also prove invaluable in the event that you need to make a claim.
Check Homeowner Policy Details
One common mistake that many homeowners make is to not check the policy details before making a commitment. It is only when something happens that they realize that they are not actually covered for an adequate amount, or there are certain items that they are not covered for.
Before you commit to a policy, you should make sure that you read every bit of the policy – including the small print! This will help to ensure that you have a policy that will provide the right level of cover. If you have any questions with regards to the policy before you make a commitment, you should address your concerns with the insurer. It is important to be one hundred percent confident about the policy you are taking out before you commit – after all, you are paying to provide your home and belongings with financial protection, so it is vital that you ensure you are getting the right levels of coverage.
Home Contents Insurance
In short, a home contents insurance policy insures against the contents of your home being damaged, lost (in certain circumstances) or stolen. As the name suggests, primarily this type of insurance is insurance against any of these unpleasant events happening to items in your home; however, reading a home contents insurance policy carefully may mean that there are certain circumstances under which you may claim against the home contents insurance policy even when one of these events happens outside of the home.
How does the policy work? Like all insurance policies – to one extent or another – home contents insurance works on the basis of the total sum insured. As such, when you are filling in your home contents insurance policy submission form, you are asked to provide a breakdown of all the major items in your insuring. However, you do need to be careful because most home contents insurance policies have a threshold amount, over which you need to individually declare (and possibly insure) the item as a separate item, and which may not be allowed to include in your overall home contents insurance policy.
How is the ‘value’ calculated? As we all know, 90% of the items we have in our home are of no value to anyone but ourselves – they have real sentimental value. However, for the purposes of your home contents insurance policy, ‘sentimental value’ means nothing – your premiums are calculated on the cold hard cash cost of replacing that item!
Cataloging your home In order to give both yourself and you insurance company a better understanding of the items that are in your home and that are being insured, it is always a good idea that you catalogue the items in your home. An increasingly popular way for people to catalogue the valuables in their home to go around the house with a video camera and taking video footage of each room.
What about risk factor? All insurance is based on risk – the risk of the insurance company having to pay out – and home contents insurance is no different is this regard. So, if you live in a neighborhood of high crime, you should expect insurance companies to either refuse to insure you or to ask for very hefty premiums. Alternatively, if you live in a nice quiet neighborhood with little or no reported crime, then you should expect your premiums to be very low indeed.
Renewing your home contents insurance It is something most people who have home contents insurance forget, yet it is essential that you do it right: when it comes to time to re-insure your home contents, you must remember what you bought over the last year so that you can add this to you new policy. To do otherwise means that these items are unlikely to be insured. Likewise, you must remember that a gap may grow between the real value of replacing items that increase in value and the items insurance value (a classic example, diamond rings). On the other hand, the cost of replacing items that deprecate in value, such a television, may go down from what they were last year, but may go up again if such items become considered collectors’ items or antiques!