If you have a house or property, it is very important for you to have insurance. You cannot be sure when your house will be affected by a disaster or a new home has not been tested for its durability. Moreover, it will certainly require a large cost to fix the house or rebuild from the ground-up.
However, you need to know more about insurance before you take it. So, you will know what things will be covered by insurance and how much it will cost to buy insurance. Guidance on home insurance that you need to know will be discussed below:
Why Would You Need Home Insurance for Your New House
You need insurance to provide property protection, which includes the physical structure of your house and your personal property in the event of damage or destructions.
Moreover, insurance is also needed to provide liability coverage. You will get protection if something peril happens around your property. For example, if someone else’s property is damaged or destroyed while on your property, your homeowner’s policy will cover your personal legal responsibilities.
Insurance is also needed if you have a mortgage. Usually, mortgage lenders require insurance as long as you have a mortgage. You also have to list the lender as the mortgage on the policy.
Insurance will only cover if your house is damaged due to certain perils, the reason for the loss, or depends on your policy. In general, insurance will cover if the following occurs:
- Fire, smoke, wind, hail, lightning, and explosions.
- Theft or vandalism.
- Trees and other falling objects.
- Weight of ice, snow, and sleet.
- Damaged from aircraft, car, or other vehicles
- Water damaged caused by a ruptured pipe.
Insurance usually will not cover a house in areas that have high predictions and frequent disaster. Perils that will not be covered by insurance; for example, floods, ground movements (earthquakes, landslides, and mudflows), and damage from pets, bird, rats, and insects. Moreover, perils that will not be covered are pollution damage, deliberate damage to the home and normal wear and tear.
How Much Should You Insure Your House For?
You need to remember that the cost you buy a house is not the same as your costs if you want to build a house from the ground-up. In fact, the value of a house is in the land, whereas insurance will only cover the costs of raw materials and labor needed to rebuild your house in the event of a disaster.
There are two methods that are usually applied by insurance regarding how much coverage you need:
- The square meter calculates the cost, so this method uses a rough calculation based on the size of the house and the material used.
- The second method is based on element estimation. Therefore, this method will detail the building elements used to calculate construction costs from the ground-up. The calculation starts from local wages, material rates, to other construction data.
Underinsured is a big problem if your house is in a disaster-prone area, such as a bushfire or the flood. So, it will be so important for you to get an accurate estimate for your house insurance so that your house will be fully covered in the event of a disaster.