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Young Families - Buying a House
Buying a home
will probably be the largest single financial investment
you will ever make. For most people, their home is their
life savings tied up in bricks and mortar – bricks and
mortar that, no matter how well built, are vulnerable to
fire, theft and other disasters.
Could you possibly
afford to replace absolutely everything you own?
Recovering from even a partial loss, like having your
home broken into and many possessions stolen, would cost
more than most people could manage on their own. Home
insurance is there to protect you from having to pay out
a huge amount at one time, often at the very worst time
emotionally.
There are several
types of insurance polices you can purchase. Please
remember that the wording and what is covered may vary
within these general categories from one insurance
company to another. Trade names may also be used.
Comprehensive: This is the most inclusive home
insurance policy; it covers both the building and its
contents for all risks, subject to a few specific
exclusions. There are two types of insurance risks that
are not normally included in any standard home insurance policy –
those for which you can buy insurance (“optional
coverage”) and those for which insurance is not
available (“uninsurable
peril").
Basic/Named
Perils: If you are
looking to save money by carrying the financial risk of
some losses yourself, you may wish to consider a named
perils policy that covers only those perils that are
specifically stated in the policy.
Broad: If
the comprehensive policy costs more than you want to pay
and the named perils policy seems too risky, a
mid-priced compromise is the broad insurance policy.
This policy provides comprehensive coverage on the
big-ticket items like the building and named perils
coverage on the contents.
No Frills:
Some insurers offer very basic or “No Frills” coverage
for properties that don’t meet their normal standards.
If there are physical problems with your home that keep
it from meeting insurers' standards, you may save money
in the long run by correcting these problems in order to
qualify for better coverage.
Optional Coverage:
For home insurance, optional coverage is that which is not normally
included in standard home insurance policies, but which can be purchased
separately, such as coverage for damage from earthquakes, furnace oil
spills and sewer back-up.
Uninsurable Peril:
These are events or situations for which insurance coverage cannot
be purchased. The damage as a result of these incidents is usually predictable
or preventable. For example, if you build your house on a flood plain,
your house will, at some point, be flooded. Flooding, in this case,
is an uninsurable peril. |
