Buying a Home in 2021? Everything Your Insurance Company Thinks You Know, But You Probably Don’t

Buying a Home in 2021? Everything Your Insurance Company Thinks You Know, But You Probably Don’t

Buying a new home is a significant investment on your part. When you consider that your house will have everything in it that is near and dear to you, it is not surprising that insuring your house and its contents is as important a consideration as the new home itself!

However, there are many things that your home insurance company takes for granted you know about. So, we put together a list of things to help you understand the ins and outs of home insurance.

Firstly, Why do I Need Homeowners Insurance?

When it comes to homeowners insurance (also known as house or building insurance), all financial institutes will insist on the presence of a homeowners insurance policy before approving a home loan. The reason for that is relatively straightforward - they want to ensure their risk of lending you money is covered should anything catastrophic happen to the structure of the house, such as fire or flood damage.

While most banks may offer their own homeowners insurance solutions, it is worth noting that it is not compulsory to take their insurance for them to give you a home loan. You simply need to prove that you do have a comprehensive homeowners insurance policy in place.

There are other insurance solutions worth considering when buying a home in 2021, which will be explained in more detail in this article.

Homeowners Insurance Explained What’s the Difference Between Building Insurance and Home Contents Insurance?

Many first time homeowners believe that homeowners insurance or property insurance covers everything, and - in the event of a disaster - all their personal belongings as well as the building will be covered. However, this is not the case.

There is a difference between building and household contents insurance, and having both is important. While both types of insurance provide cover for damage caused by fire, lightning, explosion, storm, wind, rain, hail, snow, water or earthquake, the cover relates to different parts of the house.

Buildings insurance

Building insurance (homeowners insurance) covers the property for the value of the structure of your home, any outbuildings, as well as their permanent fittings, paving, swimming pools fencing/walls etc. against storm, fire, malicious damage and theft etc. When looking for good homeowners insurance it is worth finding out if they also provide cover for alternative accommodation, loss of water, as well as rental costs for alternative accommodation should your home become temporarily uninhabitable.

Home contents insurance

House contents insurance covers everything that is yours inside the house, such as your clothes, furniture, TV, jewellery, kitchenware, and so on. A lot of people don’t have home contents insurance or they are underinsured because they don’t know how much their content is worth. Be sure to find a household insurance provider that covers against fire, theft, and damage of your precious things, as well as practical cover for laundry on the washing line, or your domestic employees’ personal effects while they are inside your home, working.

Not only will both these insurances protect you financially, they will also give you peace of mind, knowing that you and your family will be taken care of in an event of theft or a natural disaster.

What about All risks insurance?

All risks - is another insurance solution if you require extended cover. This insurance covers personal items that  homeowners would normally wear or take with them outside of their home, such as clothing, handbags, laptops, bicycles or even jewellery. These items can be part of a pre-set list of items that have general cover, or they can be part of a specified items policy that pays out a certain amount in the event of loss or damage.

New Homeowner? Here’s what you need to know about insuring your home

Here are some quick insurance tips you need to know before moving in:

  • Security first. During the first week in your new home your valuables are often most exposed to security risks as you deal with your entire household contents being delivered and unpacked while figuring out your security system. This is why it is important to activate your house and your home contents insurance policies a few days before you move in. If your insurance provider requires certain security fixtures - such as burglar bars, an alarm, etc - then use this time to install these fixtures before you move in.

Many insurance companies provide limited cover, such as fire, theft, collision or overturning of the conveying vehicle for your contents during your permanent move to a different risk address.

  • Don’t guesstimate. It can be difficult to know what the exact replacement value is of your household goods. Make use of this handy inventory calculator, or speak to your insurance broker to assist as you don’t want to run the risk of underinsuring your valuables.
  • Due diligence. As a homeowner, you have a duty of care as the policyholder to do everything in your power to limit the damage or loss after a theft or break-in. Report any stolen items to the police and your insurer immediately, and then take the time to do a proper stocktake of all stolen items for your insurer.
Keep your insurance up-to-date

It is the homeowner’s responsibility to ensure the house and contents remain adequately insured. That is why it is imperative that you review your insurance policy at least once every year. This will prevent your home and contents from being under-insured, and protect you financially in the long run.

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