All you want to know about..... PROPERTY INSURANCE

4.  The difference between homeowners' (Houseowners) insurance and home contents (Householders) insurance:-

The policy difference

Just because you have homeowners' policy does not mean your possessions are protected


Most homeowners are under the impression that the contents of their house are protected simply because they have homeowners' insurance.  They could not be more mistaken.  Homeowners' insurance only covers your house and not its contents, for which you will have to take out a householder's insurance.

What's the difference? Houseowners & Householders

Essentially, homeowners' insurance protects the four walls and roof within which you keep your earthly possessions.  It does not cover that work of art by the brilliant up-and-coming artist, or the one-of-a-kind antique kopitiam table you hunted high and low for in Malacca or the Chinese cabinet housing your valuable porcelain collection.

A basic homeowners' policy covers perils - specifically named risks such as explosion, fire, flood, impact or lightning.  With this type of policy, any risk that is not mentioned specifically in your policy is not covered.  However, you can purchase special policies that cover the house for all perils except those explicitly excluded by the policy.

Generally, dwelling coverage is based on replacement cost, meaning that in the event of a total loss, the policy will provide reimbursement, up to the policy limit, to replace the structure.  Ideally, a homeowner should buy enough insurance to completely rebuild the home, known as replacement value.

Homeowners' insurance rates vary, depending on the cost of the residence.  It also used to be based on geographical location - some insurance companies may still use that as part of the yardstick for how much premium you should pay.

To ensure the contents of the home are properly covered, homeowners should also think about purchasing householders' insurance.  It ensures that the contents of your home are insured against perils such as fire, flood or theft, and is a prudent option if you live in fear of damage or loss of your possessions.

However, read the fine print before you buy the package.  Some policies provide actual cash value coverage that includes depreciation or full-value contents without depreciation.

Actual cash value means if a power surge blows out your 10-year-old television set, the insurance company would most likely calculate the useful life of the item and then depreciate the item to present value.  A depreciated 10-year-old television set ... well, you get the picture.

A full-value contents coverage, on the other hand, would provide for a new television set.  Basically, it means the insurance company will replace the item you have lost.  However, you will have to ensure that the sum insured is adequate.

If you have expensive personal items such as jewellery, a 200-year-old Persian rug or an expensive painting, it would also be wise to take out a personal property rider for those specific items.

Even if you do not own a home but are renting, you could still need insurance.  The same rules still apply - you need to protect your clothes, furnishings, and personal belongings from a fire or a break-in.  You should have the same coverage as someone who owns a home.

However, do read your tenant's agreement carefully first before you rush out to buy an insurance package.  You may only need coverage for your belongings - or you may need an actual homeowner's package if your agreement says you would be liable should there be any damage to the dwelling.

Educating yourself

How you find out what is and what is not covered under your homeowner or householder policy?

Read the insurance policy very, very carefully, especially the fine print.  It is not likely to be fun reading but the good news is that if you read and understand your policy before it is needed, this knowledge may save unexpected financial losses should a problem occur.  It is also best to consult your insurance agent or the company that issued the policy for details if you are unclear about anything.  Understanding your homeowners' or householders' insurance policy is best handled before a claim is made.

In the case of valuable contents, an inventory of items room by room is important, together with information such as the purchase date, the original cost of each item and a brief description.  Photographs may be very helpful along with the inventory.  These items should be stored in a safe place such as a safety deposit box in a bank and not in the home because if the home is destroyed, chances are the inventory may also be destroyed.

There is so much at stake with householders' insurance, and it is easy to lose everything you own in a blink of an eye if you are not adequately covered.

^ Article extracted from NST Property Times - Signed&Safe


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