A house is probably one of the most valuable assets you’ll ever own. You’ve surely put a lot of time and effort into finding the ideal house for you and your family. You’ve done your homework, researched the market, compared prices, considered different locations and viewed countless properties before deciding on the one. It makes sense to show the same interest and commitment when it comes to choosing the right home insurance.
Most people only think about home insurance when they are faced with an unpleasant situation. A pipe bursts and the house is flooded, a fire damages the property or a thief breaks in and steals some of your belongings. This is when you rely on your home insurance to help you deal with the financial consequences of the disaster. But if you haven’t paid enough attention when purchasing your home insurance, the help you’ll get might not be what you expected. That’s why it’s important to take your time and learn a thing or two about home insurance before disaster strikes, not after.
Here are 8 things every homeowner should consider when shopping around for home insurance.
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How home insurance is divided
When it comes to home insurance a house is separated into two distinct categories: buildings and contents. Buildings insurance covers the property’s structures and the materials from which it’s built and all permanent fixtures and appliances. As you might guess, contents insurance covers your personal effects.
As a homeowner, it’s recommended to be cautious and get both types of coverage. There are many things that can go wrong, so it’s best to be prepared for the worst. Here’s how these policies can help:
- Buildings insurance can cover property damage caused by:
- falling trees or branches
- impact from vehicles
- Contents insurance can cover effects against:
Actual cash value vs. replacement cost
Homeowners should also understand the difference between cash value and replacement cost. As insurance experts from Duliban explain, a home’s value depreciates over time. Cash value refers to how much a property is currently worth on the market. On the other hand, replacement cost refers to how much it would cost to rebuild your entire property, without taking depreciation into account. That’s why it’s advisable to go for home insurance based on replacement cost, even though it tends to be a bit more expensive than what you would pay for a policy based on actual cash value.
Reduce premiums with precautionary measures
Remember the better safe than sorry adage you’ve probably heard a thousand times? Well, insurance companies really appreciate this approach. Every little improvement you make on your house concerning safety can help you reduce premium costs. Even small additions such as smoke detectors or security alarms that most people have these days can make a difference. When calculating insurance costs, companies always take into account potential risks, so taking a few preventive measures can really pay off. Think about things like pool covers, efficient electrical and heating systems or sprinklers can all help you earn a significant discount.
Consider cover away from home
There are certain assets that you often use when you’re away from home. It can be a gadget that you take with you wherever you go or it might be some expensive sports equipment that you utilize frequently. If you want to protect these items against theft or damage when you’re not using them inside the house, you should consider getting a personal possession cover. It’s a valuable add-on to your insurance policy as it can give you peace of mind knowing your assets are covered no matter the location.
Unusual property cover
Not everyone lives in a conventional home like the rest of the world. Some people decided to get more creative and choose a less ordinary property to call their home. Insurance companies are more than happy when they have to deal with traditional chocolate-box homes, but when an unusual property comes up, the premiums will increase. So what qualifies as an unusual property? Listed buildings, houses with quirky features, conversions – houses that were once barns, windmills, churches, silos, water towers or even historic fortresses – all fall in this category. If you are the happy owner of such a house, don’t be surprised if you’ll have to get more money out of your pocket to pay for good home insurance.
Don’t wait to file a claim
The unexpected happened, your property was damaged and now you are wondering what to do. You shouldn’t wait and wonder for too long though. Policies usually come with a specific time frame in which you can report the problem. If you call your insurance company a month after the incident happened, not only your issue is most likely going to get worse, but chances are you won’t benefit from any coverage. So when you purchase home insurance make sure you discuss how much time you have at your disposal to file a claim.
High deductibles are worth it
Deductibles refer to the amount of money you have to pay out of your pocket when you report a claim. High insurances might scare homeowners away, but in reality you have little reasons to worry. Huge disasters happen very rarely and most people only file a claim once or twice in their lives. Therefore, you should opt for the highest deductible you could afford, as that will reduce the amount you have to pay for your insurance. In the long run, a higher deductible will help you save money.
Enquire about no claims discount (NCD)
Speaking of saving money, another way to cut you insurance expenses is to enquire about a no claims discount or NCD. It’s like being rewarded for good behavior. If you haven’t filed claims for more than a year, your insurance company could lower the value of monthly premiums. Having more years without making any claim, can reduce insurance costs significantly.