Is Your Home Insurance Covering Everything You Own?
Did you know that not all home insurance policies provide the same level of protection? Just because you have a policy doesn’t mean everything in your home is covered should something unfortunate occur. You may be assuming a level of protection which simply doesn’t exist in your current policy. That’s why it’s crucial to understand exactly what your home insurance policy does and doesn’t cover.
A Study of Your Policy
A wise approach to ensuring you have comprehensive protection is to thoroughly go through your insurance terms. If need be, take the opportunity to compare house insurance from different providers to ascertain what kind of coverage is feasible for your needs. It’s crucial to understand what your policy covers under “contents” because this is often mistaken as an all-encompassing term. In reality, it might cover items like furniture, clothing and appliances, but exclude things such as laptops, mobile phones and jewellery.
The Risk of Underinsurance
One of the most alarming facts about home insurance policies in the UK is the sheer number of homeowners who are underinsured. This isn’t due to negligence, but more to a lack of understanding. Many people simply don’t realise that regular, everyday items can add up to a high value. Underinsurance can lead to huge financial losses in the event of a claim.
The Hidden Exclusions
Certain exclusions might not be immediately obvious when you sign up for home insurance. For example, high-value items or collections may be out of standard cover. These might include precious artefacts, antique furniture, or expensive jewellery. Even mundane items could be exempt if they’re used for business purposes. It’s equally essential to understand that some forms of damage, such as that caused by leaky pipes, gradual deterioration or pest infestations, could be excluded.
Keeping Up-To-Date
Even if you took the time to learn your policy inside out when you first purchased it, changes in your circumstances or in the policy itself could affect your level of coverage. Make it a regular habit to revisit your policy and update it as necessary. If you’ve recently made a high-end purchase, it’s vital to check if it’s covered.
Types of Cover
These vary from policy to policy, but generally, you will find two types available. ‘Indemnity’ policy is a ‘wear and tear’ policy and is generally cheaper because it takes into account depreciation. For instance, if a three-year-old television gets damaged, the payout would be enough to buy a similar-aged model. ‘New-for-old’ policy is more comprehensive and, as the name implies, the payout is enough to buy a brand new item.
Valuation and Calculation
Estimating the value of your contents is not rocket science, but it’s important to be accurate in order to be adequately insured. Start by creating a list and categorising them into different rooms. For each item, note the cost of replacing it as new – even if you’ve got an indemnity policy. Once you’ve totalled up, compare it with your current contents insurance amount and make sure you’re not underinsured.
Accidental Damage Cover
While most home insurance policies cover damage from unforeseen events like storms and fires, they may not include accidental damage cover, which protects against mishaps like spilled red wine on a new carpet. Therefore, check if this feature is included in your policy if you feel it’s necessary for your lifestyle.
In Conclusion
Making the assumption that your home insurance covers everything could be a risky gamble that leads to significant out-of-pocket costs if you have to make a claim. Taking time to thoroughly understand your policy or compare it with others can reveal gaps in your coverage. The first thing you need to know is exactly what you own and what it’s worth. The second is what your policy covers. If there are high-value or higher-risk items, whether they need to be named separately, or if you need a higher premium. Don’t assume – make sure your home indeed means your assured sanctuary. You don’t want to find out you’re not fully covered when it’s too late.