Why Most Homeowners Are Undervaluing Their Assets Without Knowing It

Your home is your most precious asset, and it’s important to protect it with insurance in case anything goes wrong. The alternative is to risk being faced with a large repair bill - or worse.

Do I need it?

Standard insurance policies generally cover damage to your home and its contents, as well as liability for accidents that occur on your property. If you have a mortgage, most lenders will require that you have a home policy that covers damage at least equivalent to the amount of the mortgage, to protect their share of the asset.

There are three types of standard cover:

Coverage A – this normally covers damage to your home by fire, wind and hail as well as fixed contents. Fixed contents means anything that is physically attached to the property, such as cupboards and some kitchen appliances.

Coverage B - this is less important and covers all other structures around your property, such as sheds, fences, garages etc.

Coverage C – this covers all personal, non-fixed items. This is where cover often falls short, as people underestimate amount and value of what they have. It’s also important to make an inventory of all your items to help with any claim.

Coverage D – This covers reasonable additional living expenses if you are forced to leave your home because of accident or natural disaster.

Coverage E – this covers lawsuits brought against you or your family for injury which occurs to anyone while on your property.

Exclusions

What is covered can be as important as what is not, and you should clarify this with your insurers. For example, wear and tear is not normally covered, and flood and earthquake damage will only be covered by a separate policy. Cover can either be including or excluding the depreciation value of items and there is usually an initial amount that is deducted from any payment.

Assessing cover

Your insurer will also need to inspect your home before granting the policy to see that the contents cover is broadly reasonable. They will also check for any major risks or security issues such as faulty window locks. In some cases they may require that enhanced security measures are put in place.