What is home insurance?
There are three main house insurance (or flat insurance) policies: buildings insurance, contents insurance
and combined building and contents cover. Buildings insurance cover protects the structure, the fixtures and fittings in your home; while contents insurance covers your belongings.
Combined buildings & contents cover is only suitable for people who own their homes. If you rent, buildings cover should be handled by your landlord. Contents insurance, however, is your responsibility and should be considered by everyone. See our Tenants’ Contents Insurance guide for more.
Why You Shouldn’t Wait to File a Claim
When buying a policy, make sure to ask about time limits to report a claim, and then abide by them! If you wait too long,
you may not be eligible for benefits—especially if waiting has made the problem worse. David Baxter works for a residential and commercial restoration company in Florida,
and he remembers a customer with water damage who waited almost a month to do anything about it.
“When the mold set in, and he decided to call, his insurance didn’t cover him because it was outside of the 14-day window required for reporting the problem,” Baxter says.
How to Save by Bundling
One way to save money is to bundle your homeowner’s insurance with other policies that you already own. “But don’t just buy a bunch of policies in order to ‘save’ money,” Derrick cautions. “For example,
it makes a lot of sense to have your car and homeowner’s policies with the same company because you’ll
usually get some kind of discount. However, if you don’t have a need for life insurance, don’t buy a policy just because the agent says you’ll save money on other policies.” After all,
if you’re spending money on something that you don’t need, where are the savings?
Why You Should Shop Around
Before committing to a policy, take the time to research an agent whom you trust—preferably one with good reviews online or
via a personal recommendation. It’s certainly something that Ramzy Ayyad, who struggled to receive benefits following a
house fire in November 2008, recommends that prospective homeowners do. “I had to deal with a rude adjuster,” he says.
After complaining assertively to the adjuster’s boss, Ayyad finally received a check for the damages—but the process was exhausting.
By contrast, Terri Corcoran has nothing but glowing reviews for her adjuster. After a snowstorm caused a major leak in Corcoran’s
laundry room, an insurance agent came to her home to assess the damage—and promptly determined that the entire room needed to be redone.
“They wrote me a check on the spot for what it should cost,” Corcoran says. “I was really impressed by how the company responded!” Bottom line? Don’t just shop for a policy. Make sure you also select the best agent.
Moved and renting out your old home? You’ll need a new policy
There are growing numbers of accidental landlords – those who marry and move into a partner’s home and rent out their old one,
for example, or who inherit a property and decide to let it out rather than sell. Fail to let your insurer know (and, just as important, your lender!) and any claim on the cover would be invalid since your existing home insurance policy won’t be deemed valid because you’ve now got tenants in.
For convenience, you can ring your existing insurer who – in most cases – will simply ‘upgrade’ your ordinary home
insurance policy into a basic landlord policy. It takes just one phone call and there’ll usually be a higher premium to
pay to reflect this greater risk.But do this and you’ll usually find your new policy won’t include key landlord-specific extras such as loss-of-rent guarantee or public liability. Instead, you’ll likely be better off looking
for a specialist landlord policy from elsewhere that includes all the add-ons as well as basic contents and buildings cover. Ensure you get the cheapest deal by doing a landlord insurance comparison.
home insurance premium saving
How to Lower Your Home insurance Premium?
Strategies that can help in bringing your home insurance premiums down are-Reduce your liability by agreeing to share the burden of repairing. It will help in reducing your premium.
There are many such things in our house which are precious to us but there is no point in insuring them if
they are too old. For instance, your 10 years old black & white TV might be working well, but there is no
point in insuring it at a depreciated value. Be wary while making an inventory of products to be insured.
Take two or more insurance covers to become eligible to get discounts.
Like any other insurance plans, if insurers are convinced that you have
installed all safety equipments at your home then you will become eligible to get
discounted premium. If you have security guards posted 24×7 in the building and fire safety
alarms installed at home, then you will get discounts in premium
Tips for Insuring Your Home and Contents
If you can’t afford to replace absolutely everything you own after an unforeseen event, you need home insurance. Consider these tips.
Insure for rebuilding costs. With severe weather on the rise, confirm accurate replacement value.
Review your home inventory each year when you renew your policy.
For high-value jewellery or fine art, consider a separate endorsement.
Even a partial loss – such as from a break-in, theft of multiple possessions and
related damage – can potentially cause financial hardship. Home insurance protects you from having
to pay all at once to replace what was lost at what is often an emotionally difficult time.
What is covered by a homeowners insurance policy?
Generally, the dwelling, other structures on the site (separate garage or work shed), contents of the dwelling, and some liability exposure of the owners or occupants for injury to guests or workers. Are all homeowners required to have home insurance coverage by law?
No, although there may be some state exception that I am unaware of. Usually, homeowners insurance is required by mortgage lenders,
and that contract is enforceable by law. If a house is paid off, there is no requirement to insure. What affects the premiums of home insurance policies?
(The) value of the property, possibly the creditworthiness of the policyholder, location of the property
(high-crime versus low-crime area, proximity to police and fire services), use of the property, construction
materials (brick versus wood), and catastrophic exposures. In Texas, location on the Gulf Coast is expensive due
to hurricane risk, and in the “hail belt” there is a large exposure to hailstorms. In other states, the exposure may be to tornadoes, floods or earthquakes.
Homeowners may not be aware that home insurance policies do not cover some damages. What are some of those things?
Floods are not covered, although windstorms are. Mold damage is (a) special problem often not covered, but the law is evolving in different states concerning mold. Collectibles (antiques, art, stamps, books, etc.), jewelry and cash are limited in the amount of coverage. Individuals can choose to increase coverage for those items by purchasing riders for the homeowners policy, although I do not know of a rider that covers cash.
What advice can you provide to homeowners who are shopping for homeowners insurance?
It really pays to shop for vendors. I would call multiple companies — at least five — because premiums vary across companies.
The Texas Department of Insurance maintains some very useful information for consumers on its website, providing summary premium
information along with complaint ratios for companies doing business in a given territory. That information is not consistent across states, but some other states do provide consumer information through the department of insurance. Complaint ratios area good way to guess at a company’s customer satisfaction.The A.M. Best Co. maintains policyholder ratings for all companies, and consumers can look up the ratings of a company online,
for free or at a local library. The ratings are like grades — A-plus is better than A, etc.We would like to thank Allen Seward, chair of the Department of Finance, Insurance & Real Estate at the Hankamer School of
Business at Baylor University in Waco, Texas, for his insights.