As an insurance professional, you are often asked the question, “Why should I buy home insurance, other than to fulfil a mortgage requirement?”  Mortgage lenders insist that you carry insurance for the period of your loan.  Why do they insist? They insist because insurance protects their investment in case the house is damaged.  It is for this very same reason that the homeowner should want to buy home insurance.  For many of us, our home is the biggest investment that we will ever make in a lifetime and our goal should be to preserve it.  Home insurance protects that financial investment that you have made in your home and puts you in the position to rebuild after a physical loss has been suffered.

It is important to note that for home insurance to work for you, it must be properly arranged.  The following tips will help you towards achieving this:-

  • Obtain a current valuation to establish the value at which your building should be insured. In arriving at the value, it is only the rebuilding cost of structures that is pertinent.  The market value is not used because it includes the value of the land which is not included in an insurance policy. This value must include all structures within the property boundary lines, such as the house, walls, gates, fences, paved areas and water tanks.
  • Ask about the scope of cover being offered under the policy.  There are a number of perils to which your property lies exposed, such as hurricanes, fire, earthquake, flood, theft and burglary.  So make sure that you seek the cover that best suits your needs and enquire whether cover for these perils are readily available to you through the insurance company.
  • Make sure that you know the policy excess. The excess is the amount of loss that you , the insured, must pay if loss occurs.  It may reflect a percentage of the value of your home or a fixed dollar amount.  In many hurricane exposed areas, excesses may range from two to five percent of your home’s value.  Some perils may not carry an excess so familiarize yourself with the types of losses to which the excess applies on you policy and plan to pay that amount towards restoration after a loss.
  • Ask about any additional benefits available to you under the policy.  Some policies extend to cover the cost of clearing debris from a damaged site, the cost of alternative accommodation if the home is inhabitable after a loss and compensation costs to your household employee or third parties should you be found legally liable for injury or property damage suffered by them while on your premises.

Home insurance is not limited to buildings but will cover your household contents as well. So, if you do not own a home, insurance protection is also available to you as a renter.  Make a comprehensive list of all your furniture, appliances, personal effects, electronic equipment and other household contents.  It is often a requirement of the insurance company that valuations be obtained for valuable property, such as jewellery.  This list should be updated each time a new acquisition is made or, likewise, when an item is discarded. You may take photographs of your valuable items and have your insurer retain copies on their file.   Keep your own copies of this information in a safe place, such as a safety deposit box, so that it is easily accessible should an event take place.

Home insurance is important to you as it is your safeguard against potential catastrophic loss.  It affords you the ability to pay a manageable amount each year to buy protection against the possibility of that substantial loss that could occur.

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