5 Reasons Why You Should Purchase Home Insurance
Purchasing a high-quality home insurance policy could mean the difference between wholly paying for flood in your basement and being covered!
However, home insurance does a lot more than just cover you in the presence of a weather-based disaster; it can also protect your personal and financial liability. In the end, you’ll save yourself a lot of money. Here’s how.
What Types of Home & Content Insurance are Available?
In Australia, there are 4 home & content insurance products available:
- Home Insurance: Most home insurance policies will cover the cost of repairing or replacing your home due to a fire, strong storm, or other malicious damage.
- Contents Insurance: Home insurance only covers the structure of your home, but contents insurance covers everything inside it. Personal belongings, like electronics, furniture, tools, and jewelry, can be covered if they’re stolen, lost, or damaged.
- Landlord Insurance: This insurance is similar to home insurance, but it’s specially tailored to landlords. It covers everything found in a home insurance policy but adds on costs related to tenant ownership, like replacing locks or protecting stolen property.
- Renters Content Insurance: This insurance is similar to contents insurance, but it’s specifically tailored to renters. Renters who aren’t convinced their landlords will cover costs related to burst pipes, floods, or faulty electricity that may occur during a storm (or poor management) can use rental insurance to cover their possessions.
Before choosing your insurance company, always compare home insurance providers in your area. Home & Contents insurance typically offers the best bang for your buck regardless of which company you choose because it protects the structure of your home and its contents.
Top 5 Reasons Why you Should Purchase Home Insurance
Purchasing home insurance (as well as contents insurance) is the best way to protect yourself from unforeseen weather, theft, and these other following occurrences.
1. Protects Equity on Your Investments
Most Australians would say that their home is the largest single investment they will even make in their lifetime. Homeowner’s insurance protects the equity of their homes by ensuring it replaces its structure, so it stays habitable in the long term. Since equity is the value of a piece of the property over and above what a mortgage places upon it, insurance will keep it high. As you make renovations to your home, your equity increases. As your home becomes damaged, so does its equity. Building equity takes years and is determined by time, the market, and the property’s condition. Insurance can at least protect the latter half.
2. Protects Against Robbery or Theft
Coming home to find your possessions stolen can really hurt your budget and your ability to work if you’re self-employed. While a home insurance policy alone won’t help you here, a contents insurance package will do the trick. Anything stolen and replaceable can be covered with contents insurance and will typically be reimbursed for its actual cash value. To ensure you get the actual cash value of each item, you need to create an inventory of the items in your home. This way, the insurance company can quickly provide a replacement.
3. Protects Against Natural Disasters
Australia is prone to natural hazards due to its variable climate, geography, and environment placements amongst the community. Although Australia does what it can to make homes that are strong enough to account for its many natural disasters, it can’t prevent them all. The 2019-20 bushfire season alone caused the destruction of over 3,000 homes in NSW. Other current natural disasters, like the NSW flooding and the Victoria storms, caused 18,000 people to evacuate and left 56,000 without power. As destructive weather becomes more and more prevalent, the need for home & contents insurance becomes more of a necessity.
4. Protects From Loss of Home Use
Are you willing to stay in a home with a large hole in its roof? What about a home that has no electricity, water, or gas running through it? An uninhabitable house isn’t just a depressing sight; it can also cause a lot of adverse health outcomes for the people living inside. Since a flood can produce mold and a large gap in its structure can lead to pests, it’s best to get out right away. Many home insurance plans will cover “loss of use,” which is when a home becomes uninhabitable in the long or short term. Depending on your insurance package, you’ll be reimbursed for your hotel stay and living expenses, up to a certain percentage.
5. Protects Your Peace of Mind
Peace of mind can be worth its weight in gold if you have many items in your home you can’t bear to live without. This can even include the cost of your actual home, which is much more difficult to replace than any other household object.
To protect yourself from theft, natural disasters, and home loss, you’ll need to make monthly payments towards home insurance.