Home insurance is a very important risk mitigation tool for new homebuyers, especially with global warming on the rise where several cities are prone to damages caused by flood, storm and landslides. It can protect the insured with financial support if the covered property suffered loss due to any of the perils listed in the insurance policy. Here are five important things to keep in mind while you are choosing a home insurance policy.
- How much home insurance cover value do you need?
Homes can have risk on its structure and on the content inside. While estimating the insurance requirement for your home structure, compare your home value with the prevailing market cost of properties that are built similarly. Under-insurance of property can expose you to financial risk. You should take the same approach when considering the insurance for contents in your home. Remember to take into account all of your belongings and make a list of all your items with its estimated prevailing value to get the adequate value of insurance.
- What type of covers should you take under home insurance?
While getting the right insurance for your home, you have the option of getting the insurance value as per the depreciated value method or the reinstatement value method. The depreciated value may fall short of realising the total cost of the property as depreciation may reduce the cover size. On the other hand, the reinstatement method will consider the cost required to rebuild the property if it is damaged so, it would be better to opt for the reinstatement coverage over the depreciated value option.
- Different insurance for varying purposes vs. single insurance
As you have the option to insure the building and contents separately, you have the ability to get a comprehensive insurance for both building and contents or, a separate policy for both purposes. While purchasing the insurance, you should carefully read the items covered under the comprehensive policy and its cost. You might actually find separate insurance covers which include more items in comparison to a single coverage but, it may cost you more with a hassle of settling claims separately. However, a combined content and building insurance policy might actually cost you less and the claims can be settled together by the same insurer.
- Covers that you may not need
Sometimes, certain home insurance policies may provide cover for items which you may not need. If you’re worried about the cost of the policy, taking out these extra covers would help to reduce the overall cost. For example, you may not need a flood cover if the place you live in is not susceptible to floods. Additionally, if the policy that you are interested in charges extra for the covers that you do not require, you might want to look for other more suitable policies.
- Use online insurance tools to compare
Before zeroing in on one policy, make sure to use the available online comparison tools to compare the different policies you might be interested in. This will help you to figure out the cost of the insurance as well as the things that it would cover.This article was originally published on bankbazaar.com and re-published on www.squarerooms.com.sg with permission.