Home insurance (also called property or home building insurance) is essential if you own or are buying a home. This type of insurance can cover you for damage to your house or apartment and legal liability. Your lender usually requires you to have it if you have a home loan.
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Most home insurance policies cover the main dwelling, garage and other outbuildings that can be locked up, home improvements at your site, and fixtures or items permanently attached or fixed to your home such as light fixtures and built in wardrobes.
Your home insurance policy may also cover other events that cause loss or damage, and may pay for costs such as rebuilding fees and temporary accommodation for home owners.
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Many different types of home building insurance policies are available to suit a wide range of living circumstances. It’s important to think about your specific risks – for instance, you may live in a flood or cyclone-prone area, or near fire-prone bushland – and find a policy that covers the risks you wish to insure. Most policies cover storms, cyclones and bushfires, but not all insurers offer flood insurance.
What is Homeowners Insurance
Homeowners insurance is a form of property insurance that covers losses and damages to an individual’s house and to assets in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.
Why Home Insurance Required?
Home insurance is usually optional, allowing homeowners to choose their policy to fit their individual needs. However, individuals whose homes are under a mortgage loan are required by their lenders to obtain adequate coverage for the dwelling, as the lender has a vested interest in the home and wants assurance that any damages accrued by the home during disasters will be covered. Exact requirements vary based on the lender, the home’s geographic location, and the weather that frequently affects the area surrounding the home.
In addition, some condo and homeowner’s associations require members to purchase a certain level of homeowner’s insurance, as the associations’ policies often do not cover the whole home. The level varies across associations, but usually includes the interior structure. A common phrase used to describe coverage is “studs in,” which means everything in the walls from the studs inward must be covered by insurance. Though it is a rare occurrence, some associations may require individuals to insure the whole building. The amount of coverage required will be covered in the association agreements.
Some geographical areas are more at risk for damage than others, and the insurance level required by lenders and associations will reflect the threats of the home’s location. Homeowners who live in areas where there are frequent earthquakes may need to purchase earthquake insurance. Homes located in areas where hurricanes are common may need to purchase a separate wind insurance policy. Whether or not you will be required to purchase additional coverage is dependent upon your location and the agreement between yourself and your lender and/or homeowner’s association.
Though flood insurance is not legally required in areas of high flooding, it is highly recommended for homeowners. Flood insurance is always considered a separate policy from standard homeowner’s insurance policies and therefore adds to the overall cost of coverage. However, flooding can happen anywhere, according to the National Flood Insurance Protection Program, and all homes can therefore benefit from flood coverage. That said, there are some homes that are considered higher risks for floods than others. Homes in high risk areas are especially in need of flood insurance. To determine whether your home is in an area of high risk.
Managing your insurance
A standard requirement of your insurance policy is to keep the property well maintained and repair any damage or deterioration. If damage occurs because you haven’t maintained your home properly, your insurer might not cover some or all of your damage or loss.
It’s important to review your policy each year and add any renovations or alterations that might affect the value of your property.
When protecting what most people would consider their most valuable asset, it’s important to remember the least expensive policy may not be the best one for your needs.