Home Insurance

Buying a house is a big investment, and you need to protect this investment by taking out home insurance. You need a policy that will cover the structure of the building, your personal possessions, living costs (if the building is damaged and you have to move out during repairs) and also your liability to others.

If you have a mortgage, then most lenders will specify that you must have a home insurance policy running alongside the life of the mortgage. It is important though to keep this up after the mortgage ends to protect your investment into the future.

Structure
In terms of structure, you need to insure your house in case it is significantly damaged and needs to be rebuilt, and so you need to make sure all the costs are covered. It might be worth seeking an estimate from a local building company just to check both you and your insurance agent have estimated the potential costs sufficiently, and will need to include the rebuilding costs of any other structures on the premises also, such as garages or garden sheds. Remember if you add any improvements to your home over the years, such as a conservatory or second bathroom, then you need to adjust your policy accordingly.

Standard homeowners policies provide do not cover all potential damages to your home, so you will need to survey the area you live in for potential local problems and make sure they are included in your insurance. For example most standard policies do not cover floods, which can cause significant damage, so if you live in an area at risk from flooding you may have to take out separate flood insurance if your insurance company will not cover this in your standard policy.

In terms of personal possessions, most standard home insurance policies will cover against theft and damage (such as by fire). They will not cover items that you have damaged through misuse. Make sure you take a full inventory of your possessions, and the cost it would take to replace them, to ensure your cover limit is high enough. It might also be a good idea to take out additional cover on particularly valuable items, such as paintings or antiques because most standard policies have limits on coverage per item which can be as low as $1,000.

Additional living expenses
This is a vital part of a home insurance policy as it covers additional living costs if your house is damaged and you have to move out whilst it is being repaired. If your house is being rebuilt, it could take many months before it is habitable again, and the costs of living in hotels or rented accommodation can be significant. Standard policies will cover accommodation bills, food and other living expenses incurred during your temporary absence. Furthermore if you rent out part of your house, then you can also get cover that will reimburse you for the rent you would have collected during the period the house is being rebuilt.

Liability
In this day and age you need to be responsible in a legal sense for anything that occurs on your property. If someone is injured on your property, or injury is caused by you or a member of your household, then you could be liable and have a lawsuit brought against you. Home insurance covers liability and can help pay the cost of any court appearances and law fees, and also any damages a court might rule you must pay.