Household insurance: Meaning, types, and how it works

household-insurance

As a homeowner, your possessions are precious to you, and every homeowner should seek the right kind of insurance protection for their property. The right kind of insurance product will ensure peace of mind and protect you from the financial loss of replacing stolen or damaged property. 

What is Home Insurance?

Home insurance is a type of insurance product for homeowners of any kind, homeowners and renters. It is also called property or home building insurance). It is an insurance product that covers damages to houses and apartments. In some cases, it also covers legal liability. 

Most home insurance policies cover the building, and items permanently attached to your home and some specific belongings. It also covers and protects the home in cases of loss or damage. Depending on the policy terms, it may pay for costs of rebuilding fees and temporary accommodation for policyholders when required.

There are different types of household insurance policies available to suit the needs and circumstances of a homeowner. It’s important to identify the kinds of risks you might be facing before you get home insurance. For example, if you know you’re likely to face certain kind of risks such as theft, flood or other disasters,  you have to find a policy that covers risks you want to insure.

Types of household insurance

There are different types of household insurance however, the following are the most common types.

  • Home Insurance – coverage for losses associated with damage or loss of properties you own.
  • Contents Insurance – Coverage for losses caused by theft, loss or damage of your belongings.
  • Renter’s Insurance or tenants insurance: Insurance protection for tenants in the home, providing cover for events such as theft and fire.
  • Landlord’s Insurance – coverage for the risks associated with renting out a property

How much home insurance do you need? 

The right amount of cover you need will vary depending on the kind of policy you take. However, it’s important you get the right amount of coverage for your home and make sure you’re not underinsured.

How premiums for home insurance are calculated?

Premiums for home insurance is determined by the likelihood of a claim being made the policy in the future.  Different factors are considered by insurers when calculating premiums for home insurers. Such as

  • The level of cover chosen
  • Location of the home
  • Year the home was constructed
  • How the home is used, for example for business or residential use
  • The risk profile of the said property
  • Condition of home

Conclusion

When you consider the expenses that come with owning a home, either by building or renting one, every homeowner should make household insurance a priority. It’s reasonable because a policy will come to your rescue in the event that something happens to your home or property. 

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