How to read a home insurance policy

Please Read your policy thoroughly!

Why you must read the fine print
Making a claim
How to make sure you have enough cover
Don't buy what you don't need!
Home

Home insurance policies can be difficult to understand if you are unfamiliar with insurance. It is important that you read through the policy booklet provided by your insurance company so that you fully understand what is covered and what is not covered to save yourself a headache later down the road. Many people assume that a certain item or fixture is covered in certain situations and file a claim with their providers, only to be told that the insurance company will not pay for repairs and it is up to the homeowners to handle the replacements.

The two main sections that make up a home insurance cover policy are buildings insurance and contents insurance. While each policy is different and every provider has their own rules and regulations about what they cover, buildings insurance typically covers the fixtures and fittings of the home itself, while contents insurance covers all of your valuables and possessions. If you are unsure what falls into the contents insurance category, a good rule of thumb is to assume that anything you could take with you were you to move house is protected.

Buildings insurance, however, can be tricky and is the most expensive part of your policy. If you own your home through a leasehold or rent your home, you may not need to buy buildings insurance. This part of your policy should state what the insurance company will protect in the event of a disaster such as theft, storms, floods, fire, smoke damage, lightning, explosions or shock. Make sure you thoroughly understand this section because it can become quite costly if you assume that the company is going to pay for repairs and they subsequently refuse.

The most common section in a home insurance policy is the contents cover, which protects appliances, food, freezers, fridges, utensils, furniture, shoes, clothes, and the contents of your garage and shed. Read through the policy and make sure that you have all of your valuable possessions covered such as jewellery, antiques and collections. If you need additional protection, your insurance company should be able to extend your cover to fit your needs. Try to avoid underestimating how much your belongings are worth, as many people have realized later that they did not buy enough insurance and will not receive enough money to replace everything they had owned before the disaster occurred.

There will also be a section in your policy about excess. This is the amount of the loss that you are responsible for paying yourself if you should need to make an insurance claim. There are two types of policy excess: compulsory and voluntary. Both of these excess have a pre-agreed value, and the homeowner must add the two amounts together to determine how much of the claim they have to pay. The purpose of policy excess levels is to deter policyholders from making small, insignificant claims. Additionally, insurance companies want to avoid paying out a lot of money on more frequent, smaller claims.

Click here for a home insurance price comparison!