Your home is probably the biggest thing you own. Home insurance protects it, along with your belongings. But many people buy a policy without really knowing what’s inside it. Let’s fix that.
What is home insurance
Home insurance is a policy that pays for damage or loss to your house and things in it, caused by events listed in the policy. It may also cover you if someone is hurt on your property and you’re held responsible.
What it usually covers
- The building: walls, roof, floors and fixed structures
- Your belongings: furniture, electronics, clothes
- Liability: if a visitor is injured or you damage someone else’s property
- Extra living costs: if your home is unlivable after a covered event, the policy may pay for a place to stay
Common covered events include fire, theft, storms and vandalism.
What it often doesn’t cover
- Floods, in many places (needs separate cover)
- Earthquakes, in many places
- Normal wear and tear
- Pest damage
- Damage from neglect
- Very expensive items above the limit, like jewelry
This is where people get surprised. Always read the exclusions.
Actual value vs replacement cost
Some policies pay the current value of your item after depreciation. Others pay what it costs to buy a new one. Replacement cost is more expensive but usually much better when you actually make a claim.
How much cover do you need
Think about what it would cost to rebuild your home from scratch, not what you paid for it or what it could sell for. Then add up the value of your belongings. Taking photos or a video of your home contents helps a lot.
Ways to save
- Raise your deductible
- Install smoke alarms and security systems
- Bundle with another policy from the same company
- Keep your home well maintained
- Compare quotes yearly
When you make a claim
- Make sure everyone is safe
- Take photos of the damage
- Contact your insurer quickly
- Keep receipts for repairs and temporary costs
- Don’t throw away damaged items until the adjuster sees them
Final thoughts
Home insurance is easy to ignore until you need it. Take an hour to read your policy this week. Knowing exactly what you’re covered for removes a lot of stress.
