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By: James Cooper on Thu Mar 27, 2008

The morning after is the worst. You and yours wake up, time for another day of work, but first some coffee, when you find out something’s amiss – the silver’s missing, or maybe a pipe burst. There’s the headache of dealing with a flooded bathroom, a missing stereo, broken windows…

If you’ve experienced this, you’re already aware of the necessity of home owner’s insurance. If you haven’t, you’re probably wondering why you would need home owner’s insurance, or maybe you know you do, but you’ve just kept putting it off, promising you’ll get to it later.

And under-insurance your assets can be almost as frustrating a mistake as not insuring your valuables at all. Picture this – you make the claim, and discover that the amount you’re covered for doesn’t nearly come close to the cost of repairs (which you’ve already made because you’ve counted your eggs before they’ve hatched) or the cost replacement (which you’ve already made because you’ve counted your eggs before they’ve hatched) and you’re left having to foot the bill for the remainder of the balance!

Insurance may not be able to re-write history, bring you back to those halcyon days, but enough coverage to ensure full compensation for lost assets or damage will help you return to a sense of normality.

To find out what an appropriate amount of coverage for your home and assets is, starting with an appropriate base cover and expanding and updating your policy as is necessary, or as you add value to your home.


There are six questions you have to ask yourself to ensure that you’re fully covered:

Are you currently under-insured?
Take a look at your policy value – the total sum of your policy is the absolute maximum amount that an insurance company will pay you on your claim. If your home’s value has increased since you first bought the policy, be sure to update it, and be sure to insure for replacement or rebuilding costs, and not just market value, which can fluctuate. Home owner’s insurance should also cover the replacement costs of everything that you own on the property – inside the house, and outside.

Single Item Limit, High Enough Policy?
Many insurance companies have a maximum claim amount of $3,000 for any single item. If you have any items that are worth more than this limit, or the limit stated on your claim, notify your insurer that you would like them added to your policy. Unfortunately, you will have to pay a higher premium, or also include an excess on your policy to cover such high-ticket items. Electronics, audio equipment, computers.

Excluded items
It’s important to thoroughly look over the policy’s terms and conditions to see if there are any exclusions on the policy – preferably before you purchase the policy, but don’t hesitate to go over it afterwards – some insurers will offer you leeway. What are exclusions? Exclusions are items or occurrences that are so commonplace that insurers are unlikely to pay out – items that are most prone to theft or damage, or certain occurrences, like flood damage. As with many things, the less expensive your policy is, the more exclusions it will likely contain.

New for Old Coverage
New for old coverage is a type of coverage insurers provided that allows for the insurer to pay out for the cost replace any damaged, lost of stolen items with the new equivalent items. Because of the fickleness of the consumer market, insurers are generally unlikely to offer new for old coverage on consumer items (such as clothing, bicycles, computer equipment, etc.) that is older than five years.

Is your home secure?
Insurers tend to be very picky about such things as home security. Doors and windows must always be locked, and your alarm armed when you’ve left the property. Having insurer approved alarms, locks and other security measures in place can help reduce the likelihood of an insurer having to pay out a claim, and thus reduce your premiums.

Do you need insurance in case of flood or earthquake?
If you live in an area prone to flooding, earthquakes or even fire, it’s of the utmost importance that your insurer be aware of that fact, although they more than likely are. Disclose any knowledge of risk to your insurer, because prior knowledge and failure to communicate that will, more often than not, result in a rejected claim. You may have to pay for additional insurance, but it’s a small price to pay, and far preferable to ending up uncovered!