The idea of home insurance has a tendency to make people angry (maybe I should say insurance in general). The idea of paying for a service that has a possibility of never getting used gives the impression of the cost of the monthly premiums just being thrown away; the counter argument for insurance being ‘well, why don’t I just take the money I’d be spending every month and just save it for a rainy day?’…yeah, but who really does that?
The reality is that most a home owner’s wealth is tied up in their homes, and to not protect that asset from risk would be a grave financial miscalculation. More often than not, the value of having insurance pay for rebuilding a kitchen after a fire or tearing out and reinstalling wood floors after a flood goes well beyond whatever you had paid previously in monthly premiums.
Houses fall prey to a number of disasters; fire, flood, termites, exploding meth labs can all damage property past most people’s means to repair it. In the north we hear a lot about burst pipes in winter, and as far as flood damage goes ‘escape of water’ one of the most common claims. To make this problem worse pipes most often burst when the home owner is out of town—making what would otherwise be a simple call to a plumber and a bit of clean-up something more like tearing out waterlogged floors and walls. Make sure you understand your insurance contract, as sometime absence from a property can void ‘escape of water’ claims.
Rarely is a house ever destroyed outright, and even if it is it is unlikely that insurance will completely cover the cost of a rebuild unless certain provisions are adding into the contract (for a price) at point of sale. For example, some insurance companies are willing to adjust claims based on inflation as well as provide grantees of full reimbursement should you be found to be acting within the bounds of your policy contract.
Accidents resulting in injury on your property can leave you totally exposed to litigation. It’s always a good idea to keep your walks free of ice, and keep you yard free of death-traps (the relevant example I can draw from my childhood is unsecured refrigerators). Home insurance will cover legal fees and settlement pay-outs to a large extent, though they do have their limits—so make sure you discuss this with your insurance agent.
Lloyds TSB home insurance will also cover what’s called ‘loss of use’, so if you have an infestation of fleas and have to have your house fumigated, your home insurance will cover the cost of living in a hotel for a week or so.
Disasters do happen however infrequent they are. Often the cost can bankrupt an individual if they are not covered for these eventualities—so in the long term, if you expect you retain any value in your home it would be a good idea where it insured.