Whether you’re an experienced homeowner with a list of properties in your portfolio, or you’ve just moved into your first rented accommodation, you’ll likely have come across home insurance in some form or other. What appears to be a straightforward agreement can become complex once the myriad of options comes to the fore, and many people end up with too little or too much cover for their needs. Here we’ll look at what home insurance is in greater detail and the considerations everyone should make prior to agreeing on a policy.
- So what is Home Insurance Exactly?
- Do I Need a House Insurance Policy?
- Types of Home Insurance
- How Much Does Home Insurance Cost?
- What is All-Risk Home Insurance?
So what is Home Insurance Exactly?
Home insurance provides cover against unfortunate incidents concerning your home and potentially the contents within it. Such policies were created to guard against fire risk, and modern-day deals can protect against the likes of theft, accidents, weather damage, or freak incidents. A 2020 American study showed that 93% of homeowners had a home insurance policy, so its importance is not to be discounted.
Types of Home Insurance
Home insurance can include cover for a physical building and/or your belongings. The type of insurance you need may depend on whether you buy or rent.
You may also find some specifically-labelled deals, such as ‘holiday home’ or ‘tenant’ insurance. A standard home insurance deal can cover these types of insurance. But be sure to share any specifics about your home’s intended use with your provider prior to closing a deal. This is to ensure that you’re covered for all eventualities.
Buildings and Contents Insurance
- Buildings Insurance
Buildings insurance covers damage to your property. Most policies will cover you for storm damage, fire, and accidents that occur within the home.
- Contents Insurance
Contents insurance looks after your possessions and may also cover these against damage that occurs when outside your home. In most cases, items must be listed individually and their value declared in advance. This will also help you decide your insurance premium to cover these items.
Do I Need a House Insurance Policy?
Whether a house insurance policy is necessary is something of a loaded question. If you’ve purchased a house with a mortgage, your mortgage provider may stipulate that a form of insurance is required for them to agree to a loan.
Likewise, if you’re renting, the owner of your property may ask for you to take out a policy before agreeing on a tenant deal. They may have house insurance to cover property damage but require you to take out contents insurance to cover your belongings. See more on this subject with our post on Home Insurance for Tenants.
Furthermore, there are simple practicalities to consider. Should your house collapse because of fire, storm damage, or some other misfortune, can you cover the cost of repairing or rebuilding it from scratch? And what if something happens to your prized possessions, be they jewellery, expensive musical instruments, or family heirlooms? Such things may be irreplaceable, but having them insured can ensure compensation should anything go wrong.
So! Despite 24% of owners never having purchased a policy, most of us will likely need some form of house insurance. Even if it’s not a legal requirement, it will usually be a sensible one. For further information, take a look at our article on the Advantages of Home Insurance.
How Much Does Home Insurance Cost?
The cost of home insurance cover depends on several factors. Firstly, every insurance company comes with its own terms and associated pricing structure. Secondly, the cost of your home and/or possessions will be an issue – naturally, it costs more to insure a £1,000,000 mansion than an £80,000 apartment. Finally, the likes of age may be a factor – modern properties are often built with a greater awareness of potential problems in mind, and so are less prone to the likes of storm damage.
The average price of home insurance in 2022 was £300 per year. However, anyone buying a modestly sized home will likely find their premium to be much lower.
What is All-Risk Home Insurance?
Those looking into buying home insurance will likely come across the term ‘all-risk’. In simplest terms, this type of insurance will cover you for ‘almost’ any eventuality. That said, it’s the ‘almost’ factor that makes such a policy worthy of closer inspection.
Should you be tempted by such a deal, dig a little deeper before signing any contract. ‘All-risk’ should cover you for most occurrences, but any such policy should include a list of exceptions. Your insurance policy will not include these exceptions, even if labelled ‘all-risk’.
For example, if you take out an ‘all risk’ policy, you’ll be covered against everything NOT listed in your exceptions list. So, if storm damage is NOT mentioned in this list, your home will be safe should a random hurricane strike. However, if your exceptions list details structural damage caused by an insect infestation, you won’t be covered should an army of hungry woodworms descend on your home.
Even the most comprehensive ‘all-risk’ policies won’t cover you for every risk. The term is shorthand for ‘most risks’, but you’ll need to study the small print of any insurance representative’s policy to know the true value of a deal.
Being clear on what home insurance is and what you’re covered for is essential for anyone considering a policy. Sadly, there are no shortcuts to be found in sourcing the right deal, but understanding the various eccentricities that fall within the home insurance realm will certainly make the task easier!
Begin your own search for the right plan by looking through our clear and transparent benefits on our home insurance page.
GasanMamo Insurance is authorised under the Insurance Business Act and regulated by the MFSA.