Home Insurance



Home insurance can be expensive. Many people are reluctant to part with a couple of hundred pounds every year for something that they do not fully understand and statistics show that the less people understand about insurance, the more likely they are to either waste money on unnecessary insurance or leave themselves unprotected altogether. This can be very unfortunate because the fact of the matter is that good home insurance is extremely important for everyone who owns their own home and a proper understanding of the basics is vital.


The basic principle of home insurance is that you are paying an insurance company to take on a risk that you cannot afford to bare yourself. Hardly anyone can afford to watch their home burn down and then simply rebuild. Insurance companies spread the risk by taking reasonable premiums from many people, and then in the event that one of them suffers a disaster, the common fund will be able to pay out. Of course there will be enough left in the fund for the insurance company to have lots of profits but by and large, people are willing to put up with this as an alternative to simply hoping that disaster doesn’t strike them.


All insurance policies will only cover you for the specific events that they include. So for example, if you have covered yourself against fire, and then you are flooded, you will not be covered. While this may seem harsh, in practice, a standard home insurance policy from a reputable insurance company will lay out a list of all the most likely risks that you need cover against and you will be protected against all of them. Nevertheless, it is an important principle to understand and you should therefore read the list of covered events carefully so you understand exactly what you are covered against.


There is no need to get more than one policy to cover the same risk because even if you do, you can only be paid out once for your loss. So always cancel your old policy if you take out a new one instead. You do not want to be paying two insurance companies when you only have to pay one. The exception to this is when each policy is covering different risks. So while it makes no sense to have two policies covering your home against fire, you may sensibly have one company protecting your building, while another one protects your home contents.

This raises another point that it is important to remember and that is that your building, and your home contents are separate things as far as insurance is concerned. If you want to protect only your building, or only your contents, say so, and if you want to protect both, then make sure that this is clear and that your policy does so.


If you do find insurance policies confusing then try to keep things as simple as possible for yourself. Get a good policy from a reputable insurer that covers you against all the risks that you need protection against. Almost all insurance companies offer policies that protect your house and contents in a single policy. This removes the risk that you will have overlapping policies. Also, even if it costs slightly more, it may be worth your while to stick to a big insurance company that you are familiar with and trust, as the whole idea of insurance is that you do not want to leave things to chance and are paying for peace of mind.


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