The home and contents insurance market is highly competitive and there's a wide variety of products out there competing for your money. But how do you know which one is right for you? And what should you be aware of when you are purchasing insurance?There are a number of questions that you need to ask yourself when you are choosing a home and contents insurance policy.
What events are covered under the policy?
No matter what policy you choose, you will only ever be covered for events that are clearly indicated in your policy document. However, different types of policies provide a different level of cover.Accidental loss or damage policies are very broad, covering all loss and damage with a minimal number of exclusions. Generally, the broader the policy, the more expensive it will be.Defined events policies, on the other hand, only cover a specific list of events which are set out in detail in the contract, such as earthquakes, fires, theft and some types of water damage. It is essential that you understand exactly what is and is not covered common exclusions include flooding, subsidence, some types of storm damage and the effects of tree roots, as well as tidal waves and acts of terrorism.
Which items are covered by the policy?
Home and contents insurance does not always come in a related package you can opt to take out insurance on your house but not your contents, and vice versa. In relation to contents, there may be limits on the amount you can claim for a specific item. For instance, there is usually a maximum amount that can be claimed for a CD collection, or a particular piece of jewellery. You can insure these particular items for their full worth by paying a larger premium or taking out a separate insurance policy.If you fail to keep your home and contents in good repair, your insurer may not pay you the full amount if you have to make a claim.
Is depreciation an issue?
Most insurance policies these days provide replacement and reinstatement cover, which means that all damaged or lost items are replaced 'new for old', regardless of their age. However, there are still a few insurance policies that replace items at their depreciated value this is known as indemnity cover. Both types of policies may place age limits on replacing items with limited life spans, such as refrigerators.
What level of excess do you need?
Excess is the money you contribute towards any claim you make on your insurance policy. This fixed amount should be clearly stated in your contract. Generally, you can set your level of excess, and this level directly affects your insurance premium. If you are willing to pay a large amount of excess in the case of a claim, you will pay less money initially. Conversely, if you do not want to pay excess at all, you will pay more up front. It's all about risk the more you are willing to expose yourself, the less you pay in the short term.
What events are covered under the policy?
No matter what policy you choose, you will only ever be covered for events that are clearly indicated in your policy document. However, different types of policies provide a different level of cover.Accidental loss or damage policies are very broad, covering all loss and damage with a minimal number of exclusions. Generally, the broader the policy, the more expensive it will be.Defined events policies, on the other hand, only cover a specific list of events which are set out in detail in the contract, such as earthquakes, fires, theft and some types of water damage. It is essential that you understand exactly what is and is not covered common exclusions include flooding, subsidence, some types of storm damage and the effects of tree roots, as well as tidal waves and acts of terrorism.
Which items are covered by the policy?
Home and contents insurance does not always come in a related package you can opt to take out insurance on your house but not your contents, and vice versa. In relation to contents, there may be limits on the amount you can claim for a specific item. For instance, there is usually a maximum amount that can be claimed for a CD collection, or a particular piece of jewellery. You can insure these particular items for their full worth by paying a larger premium or taking out a separate insurance policy.If you fail to keep your home and contents in good repair, your insurer may not pay you the full amount if you have to make a claim.
Is depreciation an issue?
Most insurance policies these days provide replacement and reinstatement cover, which means that all damaged or lost items are replaced 'new for old', regardless of their age. However, there are still a few insurance policies that replace items at their depreciated value this is known as indemnity cover. Both types of policies may place age limits on replacing items with limited life spans, such as refrigerators.
What level of excess do you need?
Excess is the money you contribute towards any claim you make on your insurance policy. This fixed amount should be clearly stated in your contract. Generally, you can set your level of excess, and this level directly affects your insurance premium. If you are willing to pay a large amount of excess in the case of a claim, you will pay less money initially. Conversely, if you do not want to pay excess at all, you will pay more up front. It's all about risk the more you are willing to expose yourself, the less you pay in the short term.
1 comment:
This is great info to know.
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