Understanding Home Insurance for Your Contents

When buying a home, many new homeowners are concerned with buildings insurance only because most mortgage companies will not complete the sale till there is proof of a policy. But what about after the home is bought and the furniture is moved in? Do mortgage companies make sure the contents of your home are insured? Most do not mention content insurance and many new homeowners are unaware of this option.

Most homeowners do not know or appreciate the importance of contents insurance till an accident or damage occurs in the home. Contents insurance does not increase the homeowner’s premium significantly, and can simply be added onto the buildings policy. In the event of a flood, beside structural damage to a home, possessions and decorations can be ruined.

An example
For example, a flood might occur even in a first floor flat because the flat above suffered a burst pipe. The damage involved might be structural, but as well as this, contents may be ruined such as carpeting and tile flooring. The insurance company may pay for the removal and drying of the carpeting but not to remove and replace the tile floor, or to remove and replace the wallpaper. If the contents insurance is not enough, the homeowner may have to replace the entire bathroom out of their own pocket. As water dried from the flood, the hidden damages begin to appear and more money has sometimes to be spent replacing personal possessions that were not covered under the policy. This expense and headache could be prevented if the homeowner properly insured their contents.

Risks to consider

• Anytime a large purchase is brought into the home, the insurance company should be notified so the contents amount covered is correct. Ask questions about the policy to find out if accident damage is covered. Some companies include it automatically, others do not.
• Children drink very deep red colour juices and are remarkably accident-prone. As children play, one spills their juice and the carpeting could be ruined unless the stain is quickly spotted. If the carpet were brand new, a contents policy with “new for old” is able to replace the carpet at full value. If the carpeting were a few years older, it might still be replaced as “new for old” if this cover has been purchased. The point is, accidents happen, and if your contents are insured it is easier to replace them.
• One thing to ask about is the coverage on items usually stored in the home but used elsewhere, such as a camera. What coverage are you entitled to when taken out of the home? Usually, a certain amount is given to the item when outside the home, and if lost or stolen, the insurance company will give that percentage for replacement. An all risks policy increases this to allow the homeowner to be fully covered on all the extras in the home and out of the home wherever they are.

Always ask your insurance company to help read through the insurance policy if you are not sure of the coverage boundaries. In the long run, the more you know the better coverage for your contents.