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What is home and contents insurance?

By Edited Apr 19, 2014 0 0

A homeowner who experiences an unexpected incident like a fire will need to specifically have home and contents insurance to protect against any loss during that incident. Obtaining an insurance quote for home contents is simple to do but things that need to be considered are the type of insurance needed, the exact items that require coverage and how much deductible will need to be covered.

The building is protected and covered for the cash value, which will be either a set amount or the replacement cost. To calculate the actual value, take the property price at the time of purchase and subtract a value equal to the depreciation. This amount will always be quite a bit less than the replacement cost. In the case of a kitchen fire, if the house was purchased a long time ago and is covered for actual value, only a part of the cost to have the kitchen repaired will be covered by the insurer. With replacement coverage, the owner is only responsible for the deductible. Replacement policies with higher deductibles will always be more expensive.

To calculate an amount for home content insurance, personal property is valued individually and the policy is capped at some maximum amount. The value of big ticket items like antiques, jewelry and collectibles usually exceed that maximum amount. To cover items like these, the insurer will have to pay more for a rider, or addition to the policy. Any items that are not included are considered self-insured and the homeowner will have sole responsibility for their replacement.

The risk taken on by the homeowner is reflected in the deductible that is agreed upon with the insurance company. A cheaper premium will be offered for a higher deductible. Deductible amounts can be anywhere from one thousand dollars to ten thousand dollars. It will be up to the homeowner to choose the one that fits best for them.

For coverage against earthquakes and floods, most companies will require an additional policy to be put in place. Do not wait for the rainy season to buy flood insurance. Typical policies require that insurance be in place for at least thirty days before any catastrophic event.

Anyone who is already familiar with the concept of car insurance, will have no trouble understanding the principles behind insuring a home and its contents. The most important thing to do is identify individual needs and purchase a policy that will provide the desired coverage.

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