The basic goal behind buying any insurance is to make you financially whole following a loss. You agree to pay a small certain fee to an insurance company today in exchange for a guarantee from the company that it will bear the burden of a large but uncertain loss in the future. Following that reasoning, property insurance protects you against damage to—or loss of—expensive personal property, such as a dwelling or a car. Forms of property insurance include auto insurance, homeowner’s insurance, renter’s insurance, and flood insurance.
Pretty much anyone who owns expensive property. Indeed, you are forced in many cases either by law or a mortgage contract to carry property insurance.
Without cover, you risk having to pay for replacements or repairs if something happens to your home or belongings. For example, if they’re damaged in a fire or a flood or if your things are stolen.
Here, we look at the importance of having home insurance and things to consider.
6 Reasons Why Home Insurance Is Important Before You Start Home Improvement
Although home improvement can go a long way to spruce up your home and get it ready for sale, you want to make sure you insure your house first before starting. Home insurance is an investment that you take on to protect your home and family comforts. So, it’s better to put your home improvement priorities aside for now. Here are some reasons why homeowners need insurance home improvement.
· Financial Protection
If your home was damaged or your possessions stolen, how would you meet the costs of repairs or replacements?
With household insurance in place, if anything happens to your property or possessions that are covered by your policy, you’ll be protected financially.
· Getting A Mortgage
Buildings insurance is often a requirement when you take out a mortgage. Your property is the mortgage lender’s security on the loan so, understandably, the lender will want to protect their financial interest by making sure the property is insured against damage. This may be due to fire, storms or subsidence.
Your mortgage provider will usually offer to sell you buildings insurance, but you can shop around for it.
· Alternative Accommodation
Let’s hope it will never happen, but what if a fire ripped through your property? Or a flood caused widespread water damage? Where would you live if your house was uninhabitable?
Most home insurance policies will provide you and your family, including your domestic pets, with somewhere to stay if it’s unsafe to stay in your home.
· Cover Against Accidents
It’s easy to spill wine on a new carpet or bang a nail through a pipe by mistake. If your home insurance policy includes accidental damage cover, it could pay out for replacements or to repair the damage. You can usually add on accidental damage cover if it isn’t included.
· New For Old
Most possessions will probably be worth less now than when you bought them – your five-year-old laptop, for example. But if something happened to them, you’d want to buy new versions. New-for-old insurance cover allows exactly that. You get a new replacement if something old is lost or damaged. Not all policies include this type of cover so make sure you check.
Pitfalls to Avoid
Check to see if your policy covers repairs at actual cash value (ACV) or at replacement cost. The latter is usually much better. Case in point: If your roof was damaged and needs to be completely replaced, the replacement cost will pay for it to be fully repaired less your deductible, while ACV will pay you what your roof was estimated to actually be worth at the time of the damage. The tradeoff is that ACV costs less than replacement cost coverage.