There are two types of homeowners insurance coverage which are basically:
1. The House Holder’s Policy
This is a type of home insurance that covers a private residence or rented home. It combines many personal insurance protections which include damage to the home, the possessions in the home and accidents that may occur within the environment of the insured property.
Some people that live in a rented apartment may think that there is no need for them to spend money insuring another person’s house but as long as you live in the rented house, you have valuable possessions in your apartment or your home which may vanish in the twinkle of an eye in the case of a fire incident, burglary or theft as the case may be.
This type of home insurance only covers possessions like furniture, valuables, jewellery, paintings, certain documents, cash kept safely in a locked steel cupboard in the home.
2. Home Owner’s Policy
This type of home insurance policy is called a multi-line policy because it includes both property insurance and liability coverage, with an indivisible premium, meaning that a single premium is paid for all risks. The cost of a homeowner’s insurance policy often depends on what the house is worth as well as the cost of belongings in the house.
The insurance policy is a legal contract between the insurance carrier (insurance company) and the named insured(s). It is a contract of indemnity and will put the insured back to the position he/she was in before the loss. However, claims due to floods or war or terrorist attacks are usually not covered amongst other standard exclusions unless there is a special arrangement for the possibility of such situations excluded here, then the insurance can be adjusted to reflect the replacement cost in which some conditions like inflation factor or cost index is applied.
For the home owner’s insurance policy, there are two forms of insurance you can choose from and they are;
1. Named perils policy
This is a policy which covers only the losses from named causes like fire, theft, burglary, flood, etc. Any other damages through any of the causes not listed in the policy will not be catered for.
2. All risks policy
This policy covers the house or home against any form of damage except those specifically due to war, riot or acts of terrorism.
Home Insurance valuation and claims
There are few valuation information and claims every insured person or a potential insured person needs to know which will help you when choosing your precise insurance type. This has to be specified when filling out all the necessary details during the issuance of the insurance contract to your preferred insurance company. These are:
– Actual cash value: This type of coverage covers the house and the value of its content after deducting depreciation. That is, if they are damaged, the insurer pays you the current worth of the items and not the original price of the item.
– Replacement cost: This is the actual cash value without the deduction of depreciation (wear and tear on the house or property with age). So you would be able to rebuild your home to its original value.
– Guaranteed (or extended) replacement cost: Here, the insurer pays for whatever it cost to repair or rebuild your home even if it’s more than the policy limit (but not usually more than 20 – 25% higher than the limit).
As it is said that, “it is better to save for the rainy day than to be drenched by the rain”, insurance is a way to keep cool in case of unfortunate days. Yes, we don’t pray that they happen but we see them happen around us. You may have seen a house gulped down by fire or a major burglary and the owners go on crying without any help. This pain could have been reduced by insurance if the house was insured.
There are so many companies offering fantastic home insurance in Nigeria. They can be contacted online via their websites. You can get access to a lot licensed by insurance companies offering good home insurance policies.