Home Insurance Basics

People are busy enough with their lives that they don’t have time to learn every single financial aspect that would help them in life. Still, they need to take hard economic decisions each year, either about utility bills or about savings and mortgages.

A lot of the people that own houses also have home insurance and they generally know that it’s there for their protection, in case something bad happens to their house. You might be asking yourself why your own premium is bigger than that of the neighbor.

The role of home insurance is, as you might guess, to protect your house in case of a disaster. There are two main types of home insurance: content and building insurance. They can be bought either separately or together.

The building insurance gives you protection for your house’s structure, plus the permanent fittings and fixtures. A mortgage will usually come with the clause attached that you need to have a building insurance.

This type of insurance will give you protection against fires, floods or storms. Some policies will also give you protection against wear and tear and malicious acts.

Content insurance on the other hand, gives you protection on the stuff you have inside the house, like curtains, carpets, furniture and clothes. This type of insurance can be difficult sometimes and it varies from one provider to another. They will protect you against floods, theft and fire. Some policies will protect you in more situations than in others and in some situations there will be a limit to the value you can put on an item you insure.

Risk factors count when it comes to the calculation of a home insurance policy. A house built in an area with a risk of flood will also come with a higher premium for its owner.