Home insurance covers the costs of repairing or rebuilding the household, if its damaged or destroyed by an insured peril that is included in the policy. The coverage may also include the contents costs with home, depending on the type of insurance policy. Broadly speaking the building insurance covers damages caused by fire, theft, earthquake, flood, riot, etc., and contents insurance covers your possessions at your home, such as furniture & fixtures, carpets, other household items etc., the insurance company pays for the damages caused to them by insured perils. It doesn’t cover only partial damages, if your home is destroyed, the insurance company will still cover your costs. Contents insurance covers your possessions at your home, such as furniture, carpets, etc. In case of damage to the contents which are covered by the policy, the insurance company will pay the costs of repairing or replacing them.
What is a Home Insurance?
Home insurance is a kind of property insurance, where one’s home and its contents are insured against various unforeseen future events.
The home insurance is of two types –
1– Building Insurance
2– Content Insurance
In building insurance policy covers building structure, permanent fixtures and fittings such as baths and toilets, fitted kitchens and bedroom cupboards. Policies usually extend to include outbuildings such as garages, greenhouses and garden sheds.
What all risks are covered?
Most policies cover damage to your home by
4. Aircraft Damage
5. Impact Damage
6. Riot, Strike, Malicious and Terrorism Damage
7. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation
8. Subsidence and Landslide including Rockslide
9. Bursting and/or overflowing of water tanks, apparatus and pipes
10. Missile Testing Operations
11. Leakage from Automatic Sprinkler Installation
12. Bush Fire
In addition to above you can take following add-ons –
1. Burglary & Theft
2. Optional Cover for Terrorism
3. Optional Cover for “Additional rent for Alternate Accommodation”
Buildings insurance does not cover wear and tear so if your property is not in a good state of repair a claim may not be paid in full.
How much buildings insurance cover do you need?
The ‘sum insured’ is the amount of money for which your home is covered and is the most an insurer will pay even if your home is burnt to the ground. It is also the amount it would cost to rebuild your home although that’s not the same as your home’s market value, which could be greater or less.
It includes furniture, household goods, food and drink, TVs, computers, clothing and valuables, usually up to a stated limit mentioned in the policy. The policy pays out if any of your home contents are lost or damaged.
How much contents insurance do you need?
To get an idea of the sum to be insured go through every room – kitchen, including the garage and shed – and write down – what it would cost to replace every item at today’s prices. The only exception is clothing and household linen where the value should be adjusted downwards to reflect wear and tear.