Home Insurance 101: Understanding the Basics
Your home is so much more than the sum of its parts. It represents the very life of your family. Having properly structured home insurance means you cover your home and everything inside it from the unexpected.
NZ home insurance through the years
In general, the only type of home insurance you’re required to get when applying for a mortgage just to cover for repairs and replacements. Most New Zealand homeowners own “actual replacement” coverage, which will restore your home after it gets damaged by fire or another calamity.
Over the years, the types of home insurance now available have changed significantly. Now, you can choose a specific total sum insured amount that will represent the total amount payable when you lose your home.
Things to consider when getting home insurance
Scope the exterior of your home
The first thing to do when considering how much coverage to get for your home is to check the outside. Find out how much it will cost to replace your home’s driveway, fence, keys and locks, and walls. If you have other structures like a tennis court or a swimming pool, you also need to note these down, too.
One common mistake people make when doing their estimates is they forget to include demolition and hauling fees. You need to make sure that you give allowance for this when coming up with an estimate. Otherwise, you’ll end up paying for this out from your own pocket.
Check the contents of your home
Next thing to check are the contents of your home. Home insurance companies don’t usually require this, but it’s a good idea to include them. After all, some of the things inside your home have the same–if not, a higher–value than other parts of your home.
Check if the policy includes a Simplified Contents coverage. This type of coverage allows you to insure specific items like jewelry and those that are kept in storage facilities. Be sure to also check if the policy covers collectible items like coins, cards, stamps and action figurines.
Choosing a home insurance company
When it’s time to find a home insurance company to cover your home, look for one that has a positive claims record and a trusted brand name. It can be tempting to go with the cheapest insurance, but this isn’t always the best option. You need to find a company that will give you the widest coverage with the lowest premiums, and the fastest processing time. A company with an AA-Standard & Poor’s rating is ideal.
Talk to your insurance adviser about whether you also need to look at income protection. Income protection is an add-on that protects you from possible foreclosure in the event that you can’t work because of illness or injury.
Finally, take the time to read your policy! It is so important to be familiar with the things that your policy covers and excludes before the unfortunate time when you need to use it.