make money

Not all home insurance policies are equal and although most offer a basic level of protection that you would expect, there are additional options available to enhance your cover and offer you a greater level of peace of mind in the event of any unforeseen circumstances.

Here is a look at why added home insurance could be a good investment and save you from unexpected financial loss.

Standard homeowners policy

A standard policy will provide you with the sort of insurance cover you would generally expect if you encounter a problem with aspects such as a fire, fallen trees or flooding causing damage at your property.

A standard home insurance policy will also protect your possessions from damage and theft so that you claim for any loss that you suffer as a result of any of these events occurring.

Working out the level of cover

As a general guide, your home insurance policy should provide you with enough cover to completely rebuild and furnish your property back to its original state should you suffer damage. The grey area is actually working out what figure you need to insure for in order to be adequately insured against these losses.

If you are under-insured and you make a claim, you could end with a problem and the insurer may reduce the settlement, meaning you could be seriously out of pocket as a result.

Get some guidance

Whilst it is financially very risky and a false economy to under-insure your property it would also be pointless over-insuring as the insurance provider will only pay you what they estimate your loss to be based on market valuations.

It would be worthwhile to get a builder to give you a rebuild estimate or ask your insurer for guidance so that you can be as accurate as possible about the figures.

Identifying the additional coverage needed

There are several key benefits that you request additional coverage for on your policy so that you have most eventualities covered. The main ones to consider are:

Guaranteed replacement cost coverage

If you can get this in place, then your insurer will pay for the rebuilding costs without any limit or restrictions, but in view of this guarantee this coverage is quite hard to find.

Extended replacement coverage

This is a good option and allows for a margin of error as many insurers will agree to a payout that is often capped at a maximum of 125% of the value of the insured of your home

Inflation guard

This feature takes the guesswork and uncertainty out of keeping pace with the effect of inflation on your home’s value, so that you will get paid at the current value in the marketplace.

Where you live

Certain areas are susceptible to elements such as flooding or other potential higher insurance risks and therefore your insurer may require you to have extra coverage on your policy if there is perceived to be a greater chance of you making a claim based on the statistics they use to set the rates.

Take the time to get a few quotes so you can compare insurance costs and also check what level of deductible is required as this can also vary and should be taken into account when you are comparing quotes.

When you take everything into consideration, many people would agree that added home insurance is a good investment.

Author Bio:

Adam Becker takes pride in having lived in a number of countries and provinces all over the world, saving as much money as possible in the process. He enjoys writing about exercise and finance when not traveling.