Unless you plan to get a private plane or mega-yacht, buying a house will probably be the single largest investment you make during your lifetime. Buying the house of your dreams can prove to be a herculean task. It takes a huge amount of time, money and planning to be able to achieve this. But is that all it takes to be a homeowner? We believe there’s more to it. 🏠
Buying a home is a long process that consists of two different but equally important phases:
The purchase phase usually includes all the gruelling budgeting, planning and legal paperwork it takes to finally get the keys 🔑 to your new house.
Protection consists of finding and purchasing the right home insurance (or homeowner's insurance, as some companies call it) for the house. Having the right home insurance is an integral part of being a responsible homeowner. Here’s why it is so important for you to find the right insurance policy for your house.
The need for home insurance
While it’s not required to get life insurance when you get a mortgage, most companies ask you to and we think that it’s one of the best reasons to purchase it. Home insurance is also not always required, but again, a great idea to get cover on the property that you plan on buying. Even the few that don’t require you to get insurance often offer significantly better premium rates if you have insurance coverage. Most temporary tenants, too, are required to get renter’s insurance before they are allowed to rent a property. ✍️
This is because homeowner’s insurance does more than just insure your property. A comprehensive policy offers extensive liability cover, accidental cover, contents insurance, etc. This ensures the complete safety of your house and all of its contents.
What does a home insurance policy provide? 🤔
- Coverage against damage to the interior or exterior of your house
You receive a 50%-80% (sometimes even 100%, depending on the amount) reimbursement if your house is damaged due to a natural calamity, vandalism or any other accident. It might be a good idea to go through the list of calamities that your insurance policy provides coverage for. Most policies do not cover floods, 🌊 and earthquakes. Additional property like outhouses, sheds, garages, etc., might also require you to get a policy add-on.
You can also add a contents insurance clause that insures all of your furniture, appliances and personal items. Contents insurance entitles you to an 80%-100% reimbursement in case your belongings are robbed, damaged or lost.
- Personal liability
Personal liability coverage protects against lawsuits filed by others. These can be any lawsuits that hold you legally responsible for any damage caused to a person on your property. What’s more? Some policies have liability protection clauses that even include your pets! 🐶 Any harm caused to a person because of your pet (in some policies, even off-premises!) will be covered in this clause.
Types of homeowner’s insurance policies
Actual cash value: these offer to pay a lump sum when you make a claim. This sum is the actual cash value of the house and your belongings, i.e., the cost of the house and all objects insured under your policy, minus depreciation (how much the value of all assets has declined since you purchased them).
Replacement cost: these policies offer to completely replace/ repair all insured assets. This means that you don’t have to worry about depreciation! For example, if you lose your couch in a fire, the policy will pay for a similar new one and not just how much the couch would’ve been worth currently. 🛋️ Naturally, replacement cost policies come with a slightly higher premium.
Guaranteed/extended cost: these are the most comprehensive inflation-buffer policies currently available on the market. A guaranteed cost policy offers to pay/replace the damaged assets completely, even if their value exceeds the policy limit. There is, however, a certain ‘ceiling’ to the overdraft amount too.
Buying a house can be tough. Once you become a homeowner, there are various maintenance and protection responsibilities. 😨 Homeowner’s insurance can help you breathe easier by ensuring the protection of your house and other related assets. If you’re looking for complete protection, life insurance is an incredibly wonderful thing to purchase for your loved ones. We offer term cover for up to £500,000, with no medical exam and it only takes up to 15 minutes! Check out our FAQs to learn more.