When a disaster strikes your home, the right home insurance policy will help you to pick up the pieces and rebuild. Home insurance covers the costs caused by any loss or damage to the home you own. With so many home insurance covers available, choosing the right insurance plan meeting your requirements is a daunting task. Home insurance basically covers the following costs:
- Damages caused by natural disasters which are out of your control such as bushfires, earthquakes or storms.
- Repairing and replacing the damaged parts including fixtures.
Always keep in mind the following basics before going ahead:
- Determining how much you need means insuring your home for its replacement value rather than what you paid for it. The slab will probably not need to be replaced so just the cost of the house to rebuild should suffice.
- Be informed about home’s insurance claim history.
- Have a clear understanding of what will actually be covered in the plan.
- Check the list of the perils covered by your policy and make sure you are fully aware of them.
- Always shop around to find the best cover, meeting your needs. Searching online or visiting some insurance companies won’t cost you much but will help you identify the best deal.
Choose it wisely: It takes a lot of consideration and a good amount of time to wisely decide what cover you really need:
- Total replacement cover: It includes all the costs to rebuild your home as it was before the fateful event. That simply means starting from scratch and refurbishing it completely to the new one.
- Sum-insured cover This type of cover is the most common and covers the cost to a set amount decided at the commencement of the policy. It is highly recommended to read the fine print carefully and clear all your doubts by asking as many questions as possible.
Calculators and estimators are the best ways to see how much cover you need. Different companies may provide different figures so be watchful.
Make sure to get enough insurance to cover the cost of labour, materials, removal of debris, also taking into consideration the costs of services of professionals to draw up plans. These costs can really burn a hole in your pocket in case of improper coverage or no coverage. For eg: In the Canberra bushfires 2003 incident, people had to leave their houses for more than 12 months in order to rebuild them.
Now to consider content insurance.
Content insurance: This type of insurance covers the cost of replacing and repairing your household goods if covered accidents occur. This encompasses furniture, appliances, jewellery and clothes. If you want to know how much home and content insurance you need, make a list of all your belongings and their respective costs in case of replacements. Go room by room to calculate close to the exact amount. Do not forget to take photos for future reference.
Choosing content insurance: You can categorise based on the nature of incidents such as defined events (e.g. burglary and fire) and accidental events. There are two types of content insurance:
- Policies that cover the cost of your valuables.
- Policies that replace your items with new ones.
The later policy is more expensive than the former one so work out what type of cover you are looking for realistically.
Note: Most content policies require you to specifically declare a list of all your collections such as Stamps, DVDs and so on. In case you do not adhere to the specified rule, you may not be able to claim amount of your loss.
Honesty is the best policy: Whatever policy you buy, honesty will always be considered the best policy. So be honest with your insurer. Make sure you tell your insurer in advance in following cases:
- When you buy or renew a policy
- If your circumstances change
- If you make a claim
Ensuring your home’s safety is ultimately your responsibility. Many insurers insist you install alarms or deadlocks on your doors. If you fail to meet the requirement of the policy, your claim may be denied. Also never try to add any fictitious item to the list of lost/damaged goods because you have to face the music in case you get caught.