Insuring Your Home: Application Process

Applying for house insurance is a straightforward process that can be done online or offline. The first step is to get your items valued, including the structural value of your home and the resale value of its contents. Next, compare insurance premiums and the inclusions, exclusions, and calculations of different policies to find the best value for money. Decide on the term of the policy, bearing in mind that longer policies may attract discounts. Finally, purchase your chosen policy, either online through the insurance company's website or offline through an agent.

Understand the value of your home and contents

When applying for home insurance, it's important to understand the value of your home and its contents. This is because the sum insured, or the maximum amount your insurance policy will pay out in the event of a claim, is based on the value of your property and possessions. Getting this figure right is essential; an overvaluation will lead to higher premiums, while an undervaluation will leave you underprotected.

To calculate the value of your home's contents, you should make an inventory of all your possessions. Go through each room, including attics, basements, sheds, and garages, and make a list of all the items in each space. Don't forget to include items that are stored away in cupboards, drawers, and storage units. You should also consider items that are currently out of the house, such as those that might be with friends, family, or at a second home.

When making your list, be sure to include even small items as their collective value can be significant. Also, remember to include items that may not seem valuable, such as curtains, carpets, and garden equipment. The only things you don't need to include are fixtures and fittings that are typically covered under buildings insurance, such as walls, windows, and roofs.

Once you have your inventory, you need to determine the value of each item. This can be done by checking purchase receipts or, if you don't have those, by using the internet or shopping catalogues to estimate the cost. Remember that the value of an item for insurance purposes is usually the cost to replace it with a new model of equivalent specification, not the price you originally paid for it. Some items, such as jewellery, artwork, and clothing, may require a professional valuation as their value can change over time.

After you've valued each item, add up the total cost to get an estimate of your home's contents value. This will be the figure you'll need to provide to your insurer. It's important to review your estimations regularly to ensure your contents insurance coverage remains accurate.

Research insurance companies and their policies

Researching insurance companies and their policies is a crucial step in choosing the best home insurance for your needs. Here are some tips to help you with your research:

• Compare multiple insurance companies: It is important to compare multiple insurance companies to find the best coverage and rates for your needs. Consider factors such as the company's financial stability, customer satisfaction ratings, and the range of coverage options offered. You can use online tools and websites to get quotes from different companies and make comparisons.
• Check third-party ratings: Look for trusted third-party ratings from organizations like J.D. Power, AM Best, and the National Association of Insurance Commissioners (NAIC). These ratings provide insights into customer satisfaction, financial strength, and complaint history.
• Understand your coverage needs: Determine the level of coverage you require based on the value of your home and belongings. Consider additional coverage options, such as flood insurance or earthquake insurance, if you live in an area prone to such disasters.
• Evaluate customer service: Consider the accessibility and responsiveness of the insurance company's customer service. Check if they offer 24/7 support, local agents, or a user-friendly digital platform for managing your policy and filing claims.
• Assess cost and discounts: Compare the cost of coverage across different companies, but don't solely focus on price. Consider the discounts offered by each company, such as bundling discounts, security system discounts, or discounts for impact-resistant features in your home.
• Read reviews and testimonials: Look for reviews and testimonials from current or previous customers of the insurance company. This can give you a first-hand account of their experience with the company's coverage, claims handling, and overall satisfaction.
• Consider specialized coverage: If you have unique circumstances, such as owning a high-value home, valuable possessions, or a rental property, look for insurance companies that specialize in these areas and offer tailored coverage options.
• Understand the claims process: Research the claims process of the insurance company, including how easy it is to file a claim, the responsiveness of their adjusters, and the overall satisfaction of their customers with the claims settlement process.

Learn about insurance jargon

When shopping for home insurance, it's important to familiarise yourself with the jargon used in insurance policies. Understanding these terms will help you compare policies and choose the right one for your needs. Here's a breakdown of some common insurance terms:

• Dwelling coverage: This refers to the main coverage on a home insurance policy, which insures the structure of your home and any attached structures like a garage or porch. The amount of insurance should be equal to the replacement cost of rebuilding your home from scratch in the event of a disaster.
• Other structures coverage: This covers physical damage to structures on your property that aren't attached to the main dwelling, such as a detached garage, guest house, or fencing.
• Personal property coverage: This covers damage to or theft of your personal belongings, including appliances, furniture, clothing, jewellery, and electronics. It's usually a percentage of your dwelling coverage amount, so it's important to know the value of your belongings.
• Additional living expenses (ALE): This covers the cost of temporary lodging and relocation expenses if your home is severely damaged or destroyed by a covered peril and you need to find alternative accommodation while repairs are being made.
• Personal liability coverage: This protects you and your assets if someone is injured on your property or if you cause damage to someone else's property. It covers legal fees and lawsuits.
• Medical payments coverage: This covers medical expenses for guests who are injured on your property, even if you are not found legally liable.
• Actual cash value: This is a type of coverage that reimburses you for the value of your property minus depreciation. It's usually the cheapest option, but it may not provide enough coverage if your belongings are damaged or destroyed.
• Replacement cost value: This type of coverage reimburses you for the full value of your property at today's prices, providing larger reimbursements when you file a claim.
• Extended replacement cost value: This optional upgrade covers the cost of rebuilding your home even if it exceeds your policy limit, protecting you from increased construction costs after a natural disaster.
• Deductible: Your deductible is the amount you're responsible for paying on each claim before your insurance company reimburses you. Choosing a higher deductible will lower your premium, but you'll contribute more towards each claim.
• Endorsement: An endorsement, or add-on, provides additional coverage for specific risks that may not be included in a standard policy, such as flooding or earthquakes.
• Exclusions: Exclusions are specific events or perils that are not covered by your insurance policy. It's important to understand what is excluded from your coverage.
• Premium: The premium is the amount you pay for your insurance policy. It can be paid annually or in instalments, and it may be discounted if you pay in full upfront.

Gather information about your home

Gathering information about your home is an important step in the process of applying for house insurance. Here are some key details you should know about your home before reaching out to insurance companies for quotes:

• Square footage and floor plan: Knowing the square footage of your home is essential for determining the cost to rebuild and the appropriate level of coverage. Additionally, having a clear understanding of your floor plan, including the number of bathrooms, garages, and fireplaces, is crucial.
• Construction details: Make a note of the year your house was built, the materials used in construction, and any subsequent renovations. This information helps assess the condition of your home and identify potential risks.
• Heating, plumbing, and electrical details: Details about the heating system, plumbing, and electrical setup of your home are important for evaluating the overall structure and identifying potential hazards.
• Roof type and age: The type and age of your roof are significant factors in assessing the condition of your home. Insurance companies may also offer discounts for certain roof types that meet specific safety standards.
• Safety and security features: Information about safety devices and security systems installed in your home, such as fire sprinklers, burglar alarms, deadbolt locks, or smart home technology, can help you qualify for discounts on your insurance premium.
• Proximity to emergency services: The distance of your home from the nearest fire department and fire hydrant is an important factor in determining the level of risk associated with your property.
• Presence of additional structures: If your property includes additional structures such as a pool, garage, shed, or fence, you will need to provide details about these structures as they may require separate coverage.
• Personal belongings and valuables: Take an inventory of your personal belongings, especially high-value items like jewellery, antiques, or expensive electronics. This will help you determine if you need additional coverage for these items.
• Renovation history: Insurance companies may ask about any upgrades or improvements you have made to your home since purchasing it, such as replacing the roof, installing a new HVAC system, or finishing the basement. These improvements can increase the value of your home and impact the replacement cost.

Compare quotes

Comparing quotes from different insurance companies is a great way to find the best deal for your home insurance. Here are some steps to help you compare quotes effectively:

• Determine your coverage needs: Calculate the amount of coverage you require by considering the replacement cost of your home, the total value of your personal belongings, and the total value of all your assets. This will ensure that you are getting quotes for the right amount of coverage.
• Understand policy inclusions and exclusions: Familiarize yourself with the different types of coverages included in a standard home insurance policy, such as dwelling coverage, personal property coverage, and personal liability coverage. Additionally, learn about the different levels of coverage, such as actual cash value, replacement cost value, and extended replacement cost value.
• Gather information about your home: To get accurate quotes, provide insurers with detailed information about your home, including square footage, roof type, heating type, renovation history, the presence of pets, pools, or trampolines, and whether it is your primary or secondary home.
• Use comparison tools: Utilize online comparison tools, such as insurance marketplaces or aggregators, to easily compare quotes from multiple companies at once. These tools allow you to input your information once and receive quotes from a range of insurers, making it more convenient and efficient than getting quotes from each company individually.
• Consider the company's reputation: In addition to comparing rates and coverage amounts, research the insurance company itself. Look into their financial strength and stability, as well as the quality of their customer service and coverage. This will help you assess their reliability and ability to pay out claims.
• Evaluate the deductible and payment options: When comparing quotes, pay attention to the deductible amount, which is the portion you are responsible for paying on each claim before the insurance company reimburses you. A higher deductible typically results in a lower premium, but ensure it is still affordable for you. Also, consider how premiums are paid, as some companies may offer discounts for annual lump-sum payments.

Frequently asked questions