What is home insurance? Learn what it covers, who needs it, how building and contents cover differ and what to check before buying. Ask Insurance Kro.
Home insurance covers your building, your household items, or both, against risks like fire, flood and other natural calamities, and burglary, as per the policy. It does not cover wear and tear. Owners and tenants can both use it in different ways.
Your home holds your money, your memories and your family. Here is how a plan can protect it.
What does home insurance mean?
You pay a premium, and the insurer agrees to pay for covered losses to your home or things, as per the policy. Plans are usually split into two parts:
- Building cover: For the structure, such as walls, roof, floors and fixed parts
- Contents cover: For things inside, such as furniture, appliances and personal items
You may buy one or both, depending on the plan and your needs.
What does it usually cover?
Cover depends on the plan, but common risks are:
- Fire: Damage from fire and related events
- Flood and natural calamities: Such as storm or earthquake, as per the policy
- Burglary and theft: Loss of household items if someone breaks in
- Other listed risks: Similar events named in the policy
Read the full list in your policy wording so you know exactly which events are included.
What is usually not covered?
Every plan has limits. Common exclusions are:
- Wear and tear: Normal ageing of the building or items
- Reasons not listed: Events the policy does not mention
- Land value: The land under your house is not part of the building cover
- Careless or illegal acts: Losses linked to these are usually excluded
Our post on what home insurance covers and does not cover goes deeper into this.
How building cover is decided
Building cover is usually based on the cost to rebuild the home, not on the market price of the land. The market price can be high because of the area, but the land does not burn or flood away. What matters is how much it would cost to rebuild the structure.
If you choose a cover that is too low, a claim may not be paid in full. Ask your advisor how the sum is set, and check your policy wording.
Who needs home insurance?
Home insurance can help many people:
- Home owners, who want to protect the structure they paid a lot for
- People with a home loan, since the building is a large asset
- Tenants, who can insure the contents of a rented home
- People who own costly items, such as electronics or jewellery, as per the plan's rules
- People in areas with flood or storm risk
Even if you rent, your own belongings are at risk. Contents cover can help.
How to choose a good plan
- Decide if you need building cover, contents cover or both.
- Work out the rebuilding cost for the building, and a fair value of your contents.
- Read the covered events and the exclusions.
- Check how claims are made and what papers are needed.
- Check for any limits on single items such as jewellery.
- Tell the truth about your home when you buy. Wrong or hidden facts can cause problems at claim time.
Keep records for claims
If something goes wrong, records make the claim smooth:
- Photos of the home and your valuable items
- Bills or proof of purchase for costly items
- A list of what is in each room
- The policy copy in a safe place, and a digital copy too
If there is a theft, inform the police and the insurer quickly. For fire or flood, tell the insurer fast and avoid changing the scene until the insurer says it is fine.
Home cover and other insurance
Home insurance protects property. Your family also needs protection for health and life. See our health insurance page and our term life insurance page. For an overview of home plans, visit our home insurance page.
Review your cover as your home changes
A home does not stay the same. You may add a floor, renovate a kitchen, buy new appliances or move valuable items in. Each change can raise the value of what needs cover. Review your policy at renewal and ask whether the sums still match. Renew on time, because a gap in cover means you are on your own if something happens.
FAQs
Is home insurance compulsory?
It is not a general legal need, but a lender may ask for it with a home loan. Check with your lender.
Does it cover my land?
No. Building cover is usually based on rebuilding cost, not on the market price of the land.
Can a tenant buy it?
Yes. Tenants can usually insure the contents of the home they rent.
Does it cover normal ageing of the house?
No. Wear and tear is not covered.
Rules and plan terms can change, so your policy document is always the final word. Insurance Kro can help you understand your options.
This guide is for information only. Rules and policy terms can change, and the policy document is final. Please read your policy wording.