When you purchase a new home, it is essential to consider taking out insurance. Your new home will constitute a large investment and you must take steps to protect the property and the possessions inside of it.
Household insurance comprises buildings insurance and contents insurance. Both of these insurance policies can be purchased separately. However, it is common for insurance providers to offer a single policy which not only covers both but saves you money too.
Buildings Insurance
Buildings insurance will provide you with cover for your property, including the basic essentials, such as bathroom and kitchen fittings and running water. It also covers you in the event that your property is completely destroyed in a fire or flood.
Contents Insurance
Contents insurance covers the possessions inside of your home. Contents insurance includes everything from your chairs and tables to jewellery, laptops and clothes. However, you must ensure that your contents insurance policy sufficiently covers the value of your possessions. Your contents insurance policy will state the limit on the amount that you can claim for. This is known as the sum assured.
Many first-time buyers underestimate the value of their possessions. To determine the amount of cover that you require, you will need to create a list of everything that you own and work out how much it would cost you to replace. You must include everything from your beds and mattresses to your carpets, clothes and food. TVs, computers, mobile phones and jewellery should also be included in your list. Insurance for possessions that you use outside of your home, such as skis, bicycles and musical instruments may be included in your chosen contents insurance. However, a general limit is normally set on these items so you may require extra cover if your possessions are particularly valuable.
Arranging Insurance Coverage
When buying your first home, ensure that you arrange for your insurance coverage to start on the day that you exchange contracts.
Reducing the Cost of Your Insurance
You can successfully reduce the price that you pay for your insurance premiums by agreeing to a higher excess on any claims made on your buildings and contents insurance policies. This means that you will have to pay out a greater amount of money towards your claim and you must ensure that you have this money to your name should you ever need to make a claim. You could request for certain types of cover to be removed from your contents insurance policy if it is not required.
Purchasing a home is an exciting – and expensive – endeavor. Meet with your financial advisor to make sure you can handle the cost of the house and the home insurance.