Comprehensive Home Insurance Coverage: All You Need to Know

Gone are the times when a home insurance policy was regarded as a luxury. Now, it’s a necessity. Not only does it protect your entire home from the insured perils such as damage or theft but is also a requirement when borrowing from mortgage companies. But before you make that jump and get a home insurance policy, here are some things that you must know beforehand. 

Let’s start with understanding what a comprehensive insurance policy entails

A home insurance policy is an insurance plan that covers any damage and destruction to the insured home, personal belongings and property.

What does comprehensive home insurance cover?

• Personal property- If your personal property including electronics, furniture, clothing, and appliances are inside the home, then they are covered under a comprehensive home insurance policy.  Some contents might have limits and if they exceed those limits, the items will need to be scheduled (which is an additional coverage and cost, not automatically covered)

• Personal liability- This covers the financial loss incurred if the insured takes legal responsibility for damage or injuries to other parties. 

• Other structures- A comprehensive home insurance policy will cover damage to tool sheds, structures, other structures such as sheds, decks, pergolas, and pool houses.

• Medical costs- Accidents happen, no matter how careful we are. If other parties are hurt while on your property, a comprehensive insurance policy will cater to the medical expenses.

Please note that the comprehensive policy will cover acts of God unless otherwise stated on the policy or by the broker based on location.  Increased premium covers those areas where acts of God are more frequent.

Once you decide to get comprehensive home insurance coverage, you should get different quotes from insurance companies. Surex can help with that by giving you a choice of our insurance partners, making sure you get the deal that is right for you. While these may differ, you can always get a lesser insurance premium as per your budget. 

Here are tips on reducing your comprehensive home insurance coverage

1. Increase your deductible

The higher your comprehensive home insurance deductible is, the lower the premiums. This is clever especially if you live in a safe neighbourhood that is not vulnerable to the insured perils. However,  if you opt for a higher deductible amount, be ready to pay up any repair that costs less than the increased deductible will not be covered by the insurance company.  They only "kick-in" if/when the expense of the repair is higher than the requested deductible

2. Have a functional security system

A functional security alarm can lower your comprehensive homeowner’s annual premiums. This is because it is easy for the authorities to respond not forgetting that a functional security system minimizes the risk of burglary and theft. However, most insurance providers will need proof of central monitoring before slashing the cost. This is a similar case to installing smoke alarms and other fire detectors such as sprinkler systems and dead-bolt locks. 

3. Shop around among various comprehensive insurance providers

Regardless of the urgency in getting comprehensive home insurance coverage, always shop around before settling on one provider. You will be surprised how much you can save with similar policies. However, this does not mean that you should settle with unreliable insurance providers. While cheap is, in fact, expensive, a reasonable difference in the cost of insurance can make a significant variance in your premiums and even deductible. 

Once you purchase your comprehensive home insurance policy, ensure you compare costs with other providers. And once you get another deal worth a move, why not take advantage of it? You can also request your current provider to review the existing policy and lower the costs. This will be an advantage especially if you have not made any claims. 

4. Do not lag with renovations

Planning for renovations in your home can substantially reduce the cost of your home insurance policy. For instance, the materials you use in your home, whether you are building a new structure or renovating the new space can affect your insurance policy. Using fast degrading materials such as wood means that regular maintenance or replacement must be carried out. Also, wood is not fire-resistant. In an instance where the structure catches fire, the structure will probably be beyond repair. Glass is also prone to breakage and may increase the cost of your policy. Also, consider other structures that may need regular maintenance such as swimming pools and trampolines. These can raise the cost of your home insurance policy. 

How will your claim be paid?

Having comprehensive home insurance coverage is an important step. However, you need to understand how you will be compensated if you make a claim. 

Your claims can be paid based on: 

• Actual cash value- This is the actual value of an item at the time the claim is made. For instance, if your 7-year refrigerator is stolen, you will be compensated for its value at the time of theft. What does this mean? This means you will not be compensated for the value of a new fridge. This is based on the principle that the item has declined in value over the years. 

• Guaranteed or extended replacement cost- This protects you from being reimbursed less amount that may fail to cover the cost of replacement. Paying for the guaranteed replacement cost option ensures you are compensated for the increase in the cost of the insured item. If you paid more for the extended replacement cost, you will be compensated the value of the item at the time of the replacement. For instance, if the cost of your TV has risen by 20%, you will be compensated the full value, making the replacement process seamless. 

• Replacement cost- This is the most common way in which a claim is paid. Based on this, insurers pay partial reimbursement before the replacement is done. Once the replacement is complete, the insurer then caters for the balance based on the receipts and invoices provided. 

• Cash out- This option is mostly available for high-value homeowners who pay high premiums. Insurance companies write up checks based on verified losses. The insurance companies are not obliged to rebuild homes or structures or replace possessions. 

• Functional replacement cost value- While this covers the cost of fixing any damages, cheaper but functional materials are used. 

While comprehensive home insurance may seem like a far-fetched plan for most people, ignoring it will be costly in the long run. Just like with any other insurance plan, your home will be safeguarded when accidents occur. And without an insurance policy, your finances can be crippled in a short frame, hence the need to protect your home with a comprehensive insurance policy.