Understanding your Home Insurance Policy

The purchase of a new home is likely to be your biggest investment and possible liability so purchasing property insurance to ensure that you are safeguarded no matter what may occur to your home is essential. However, we know that  insurance companies’ terminology can be confusing and intimidating. Therefore, we have produced a list to help navigate some of the puzzles that are associated with insurance policies.

 7 Common Myths associated with property insurance

Myth 1: Everyone exaggerates their losses and that’s okay:

After damage has occurred to your property, it is tempting to exaggerate the extent of the details in the hope of receiving more compensation. However, this is possibly the worst and most unethical thing you can do. The integrity of your claim will be compromised, your insurance loss adjuster will lose confidence in your claim and your claim won’t be taken seriously. Not to mention that its fraudulent to over exaggerate your claim.

Myth 2: Personal injuries that occur in your own property are covered by your property insurance:

This myth may have sensibility if health insurance didn’t exist in today’s world, fortunately, it does! If a personal injury occurs that involves a family member or friend, they’re not covered by your home insurance policy and neither are you. If this occurs be sure to contact your health insurance company who can provide support for you. In saying this, if your friends are prone to injuring themselves on your property frequently, I would advise against inviting them over!

Myth 3: You should insure your home for its market value:

People think that the safest and most logical option may be to ensure your property for its market value, but this isn’t the case.  The “sum insured” should meet the rebuilding cost of your property (as opposed to the market value). Some policies are “subject to average” which means that if you are under-insured, claim payments will be reduced in proportion to the under insurance. Consequently, you should ensure that your property is covered for the full value. You should ask your insurer for advice.  Ensure your rebuilding costs are index linked.  The Society of Chartered Surveyors produces a useful guide annually, which will help you calculate your rebuilding costs.  This guide is available from their website scsi.ie

Myth 4: Your insurance company covers everything in your home:

When damage has occurred to your home a sense of relief is felt knowing that your insurance company will cover all of the items and valuables lost. However, this isn’t always applicable. In certain policies, insurance companies can have restrictions and limits on replacement valuables such as jewellery, antique items, etc. If you’re in possession of items with a high value it is recommended that you place a specific add-on to your home insurance to enable you to receive compensation for those goods.

Myth 5: Older homes have lower insurance costs:

Initially, when people purchase older homes, they think that it is cheaper to insure and to repair due to a lesser amount of modern materials and goods. However due to architectural and historic features in older homes, they may cost even more to replace, for example, intricate ceiling rose’s, lath and plaster ceilings etc are very expensive to replace. Older homes may contain these specialist materials, may have asbestos and they have older plumbing and electrical services.  Therefore replacement and repairs may have higher costs, thus leading to more underwriting loadings and premiums.

Myth 6: I can’t understand the legalise language in my home policy, so why bother reading it?

As I mentioned before, the purchase of your property is potentially your biggest investment, therefore as a policyholder, it is your responsibility to ensure that you understand your policy and to ask questions. The wording in the policy can be ambiguous and that is where you can contact your home insurance company to ask questions or even if it is a minor confusion, try your best friend – google! It is advised that you do understand your policy as soon as you purchase it so that if a loss does occur you understand the extent of your cover.

Myth 7: Tenants belongings are covered under the Landlords Insurance.

This is a common misconception and can be a costly lesson. If you rent a home and it burns to the ground, your landlords insurance won’t do anything for your lost possessions. If you rent a home, purchase contents insurance; I’ve seen premiums as low as 150 Euro per year, so it’s not a major financial burden. And if you’re a landlord, require tenants to carry insurance to avoid surprises in the event of a disaster or theft.