Understanding homed insurance terms can be difficult if you are not familiar with the industry. Working with your insurance broker may help, but knowing you both are on the same page with understanding various insurance terms is important.
Beneficial Insurance Solutions is here to make it easier to understand what insurance terms are and what is covered.
Here is a guide to help you decode home insurance terms and working:
Agent and Broker
An agent represents a particular insurance company and sells their products. A broker deals with insurance products of more than one insurance provider. It doesn’t matter whom you conduct, it is important to choose an insurance policy that serves your purpose after careful research.
Deductible
The deductible is essentially the amount of money you pay upfront before the insurer pays your claim. The advantage of opting for a substantial deductible is that the premium payments would go down.
Tenant and homeowner insurance
Depending on whether you own the property or have rented it out, the nature of your policy would differ.
Homeowners’ insurance covers the entire home including its exterior, home infrastructure. It also covers theft, fire, earthquake etc. Homeowners’ insurance is more expensive compared to that of a tenant. However, you can limit the costs by choosing what you want to be covered.
Tenant or renters insurance covers only the contents if they are damaged due to fire or theft. It also covers additional living expenses if the accommodation becomes unavailable to live due to fire or flood.
Personal liability
Irrespective of whether you own the house or are a tenant, you are responsible for bodily injury or property damage unintentionally caused to others. The personal liability portion of your home insurance covers such liabilities. It doesn’t cover injuries sustained by you or other members of your family on your property.
Types of home insurance
Home insurance policies are broadly classified as basic, broad and comprehensive.
Basic coverage is minimal coverage like loss due to fire. If you take a basic policy, you can save on insurance costs and manage other potential losses yourself.
Broad coverage offers comprehensive coverage for your house but is limited to perils coverage for its contents.
Comprehensive coverage covers all the possible risks to your home and its content, except those that are specifically excluded. For obvious reasons, this type of policy attracts the highest premium payments.
Choosing perils of coverage
You can reduce your home insurance costs by specifying the perils of coverage that you want your home to be insured against. You can also add your perils coverage if required by paying the required feed. By choosing the perils of coverage, you can better plan your home insurance coverage and costs.
What is not covered?
Home insurance policies usually do not cover damages due to the freezing of indoor pipes, insect and rodent damage, damage due to landslides, earthquakes or freezing outside your homes.
Once you are aware of the insurance terms and understand their implications, you can be better equipped to make an informed decision regarding your home insurance policy. If all the information is too overwhelming, you could ask an insurance consultant to guide you.
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