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The Basics of Homeowners Insurance

By Michele Dawson | September 20, 2012

Once you buy a house, there is chaos, stress, and excitement. But as the moving boxes are being unloaded and you’re deciding how to decorate, there is still an important item on your to-do list: obtain homeowners insurance.


There are two basic parts to homeowners insurance: contents and building insurance.

Contents insurance refers to all the “things” in your house. Furniture, computers and other electronics, clothing, household supplies, toys. Basically it means all your stuff.

Building covers involves the actual house. Insurance for the building aspect of your house is how much it would cost to rebuild it. Some people get this confused with the market value of the house, but for insurance purposes, you want to have cover for how much all the supplies and labor would cost to build again should your house be destroyed, such as by fire.

Building also covers fixtures in the house like toilets, fitted kitchens, cupboards and attached enhancements, such as wallpaper. Structures like garages, greenhouses and sheds are usually covered under a building policy. However, insurers have varying policies for things like fences, gates, paths, drives and swimming pools.

Most policies will cover loss or damage from myriad sources, according to the Association of British Insurers. Covered losses include fire, lightning, earthquake, landslip, storm and flood, malicious damage, theft or would-be theft, water leaks from tanks and pipes, falling trees and branches, riot. Impact by aircraft, vehicle or animal and oil leaking from heating systems is also covered.

Things that aren’t included in most policies are: normal wear and tear, maintenance costs, faulty workmanship, breakdown, and any amount over your cover limits, damage done when the home has been unoccupied for more than 30 days, or when tenants are in the home.

Most insurance companies also offer extra cover for various items. For example, Swift Cover offers extra coverage for accidents other than those caused by fire or flood. If a tap is accidentally left running, for example, both contents and building fixtures could potentially be damaged. Extra accident coverage would cover these types of misfortunes.

Other extra cover choices include bicycle coverage, garden coverage, and valuable personal possessions that you take with you to and from your house — jewelry, laptops, mobile phones. Coverage for students away at school, family legal protection, and home assistance are also available extras.

In general when you buy a homeowners insurance policy, you choose an amount for excess. This is the amount you pay before insurance covers the rest. If a fire causes £1000 in damage, your excess might be set at £100, so the insurance company will pay £950 to repair the damage.

Oftentimes, you’ll have a lower premium if you carry a higher excess on your claims.


Some insurers may offer a reduction in premium if you accept a voluntary

For extra excess on all claims – the bigger the excess, the bigger the discount. Those who live in a flat or maisonette can opt to insure the building together to include living space and shared areas like stairs and entrances. Then residents can get their own individual contents policy.

Michele Dawson is a freelance writer based in Phoenix, Arizona. She spent seven years as a newspaper reporter and has written for various magazines and web sites specializing in real estate and home improvement, including Realty Times, SmartHomeowner, California Builder, and the Sacramento Business Journal.
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