Your home is probably the biggest purchase you'll ever make. Home insurance protects both your personal belongings and your home, as well as giving you coverage against liability claims. You should be proactive and review your current homeowner's coverage at least annually to make sure that your insurance is sufficient to rebuild or repair your home after a disaster.
The Costs to Replace your Home
Homeowners generally understand their home's value if it were to be sold. However, when it comes to construction costs, building costs, contractor costs, the current market and availability of contractors, well, most homeowners have little understanding. The 'reinstatement value' is the amount it would cost to rebuild your home, and this is how much your home should be insured for. This differs from your home's market value, which is what you would receive by selling it. If your home is insured for too little, your policy might not pay out enough for the full cost of repairing or rebuilding if it is damaged or destroyed.
Considerations
Every home insurance policy has restrictions and exclusions. This refers to the events or situations that your insurance policy does not cover. Check with your provider before you sign up because although standard exclusions are contained in every policy, specific exclusions and restrictions will vary across insurers.
The amount that you will have to pay for any claim, before your insurer pays the balance, is called the deductible. Any claim settlement will be reduced by your insurer by the amount of the excess that your policy states. You cannot claim for losses that are less than the excess.
The amount of the deductible can depend on the insurer and you can often choose this based on your comfort level for maintaining your premiums and for actually paying it out. You can often get a discount on your premium if you agree to a higher deductible.
Each year, when your policy is renewed, many insurance companies increase the amount of coverage automatically. This is known as 'indexation'. It helps you to avoid being under-insured as it increases the amount of your cover in line with inflation. Check the amount of coverage you have regularly however, to ensure you are not over- or under-insured. People generally tend to be under-insured for contents insurance and over-insured for building insurance.
The amount you pay for your home insurance depends on several factors, including the amount you insure your home for and whether you also insure your contents. The greater the insured value of your buildings and contents, the higher your premium will be.
Your home's location also affects your premiums. Insurance may cost more if your home is in an area prone to flooding, or with a high burglary rate. Rural home owners usually pay less than city home owners because urban areas have more burglary claims. You may get a discount if you have security features though.
The Costs to Replace your Home
Homeowners generally understand their home's value if it were to be sold. However, when it comes to construction costs, building costs, contractor costs, the current market and availability of contractors, well, most homeowners have little understanding. The 'reinstatement value' is the amount it would cost to rebuild your home, and this is how much your home should be insured for. This differs from your home's market value, which is what you would receive by selling it. If your home is insured for too little, your policy might not pay out enough for the full cost of repairing or rebuilding if it is damaged or destroyed.
Considerations
Every home insurance policy has restrictions and exclusions. This refers to the events or situations that your insurance policy does not cover. Check with your provider before you sign up because although standard exclusions are contained in every policy, specific exclusions and restrictions will vary across insurers.
The amount that you will have to pay for any claim, before your insurer pays the balance, is called the deductible. Any claim settlement will be reduced by your insurer by the amount of the excess that your policy states. You cannot claim for losses that are less than the excess.
The amount of the deductible can depend on the insurer and you can often choose this based on your comfort level for maintaining your premiums and for actually paying it out. You can often get a discount on your premium if you agree to a higher deductible.
Each year, when your policy is renewed, many insurance companies increase the amount of coverage automatically. This is known as 'indexation'. It helps you to avoid being under-insured as it increases the amount of your cover in line with inflation. Check the amount of coverage you have regularly however, to ensure you are not over- or under-insured. People generally tend to be under-insured for contents insurance and over-insured for building insurance.
The amount you pay for your home insurance depends on several factors, including the amount you insure your home for and whether you also insure your contents. The greater the insured value of your buildings and contents, the higher your premium will be.
Your home's location also affects your premiums. Insurance may cost more if your home is in an area prone to flooding, or with a high burglary rate. Rural home owners usually pay less than city home owners because urban areas have more burglary claims. You may get a discount if you have security features though.
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