Protecting Your Property Purchase
In many ways, insurance is like a bet. But it is an unusual bet: it is a bet you hope you lose! When it comes to buying your new home, the insurance is just as important as the home itself.
The idea of insurance is that you pay a relatively small amount each year. This is the amount that you bet. If the ‘insured event’ occurs, you then ‘win the bet’ and receive a payment. This payment reimburses you or your loved ones for the financial consequences of the insured event.
When buying a property, there are a number of types of insurance you’ll need to consider: building or home insurance, contents insurance and mortgage protection insurance to name a few. These types of insurances are reviewed below...
Building or home insurance
Depending on the type of loan you’ve taken out, under your loan contract it may be compulsory for you to take out building or home insurance to safeguard the lender’s interest in the property. You should check your loan contract to see if it is a condition on your loan.
Even if this is not mandatory, it is strongly advisable. Building or home insurance covers you for damages to your property or its fixtures. You should check the various levels of cover with your insurer and also refer to their terms and conditions for any inclusions and exclusions. Depending on your level of cover, you may be able to protect yourself for anything from fire and storm damage to burglary.
Essentially, home insurance covers the cost of restoring your property to its present condition if it is damaged. Make sure you don’t underestimate these costs, as you may end up seriously out of pocket in the long run should disaster strike
Contents insurance is designed to protect you in the case of loss or damage to your personal belongings and items in your home, such as white goods, clothing and furniture. While you may already have contents insurance, it’s a good idea to update it after a move into a new property – especially if you’ve decked out your new house with brand new furniture and appliances. You’ll usually have a choice between two types of contents insurance: a policy that replaces the old goods with new ones or you can opt for an indemnity policy, under which you’ll receive the depreciated value of what was damaged.
Income protection insurance
Income protection insurance while not mandatory for borrowers, can be an effective tool to help cover your mortgage should you find yourself unable to work through injury or are diagnosed with a serious illness.
Typically income protection insurance goes towards the cost of your mortgage repayments, providing you time to re-enter the workforce or focus on regaining your health.
Speak with us if you’d like more information on any of these types of insurances.
3 tips for finding the right insurance
1) TAKE TIME TO SHOP AROUND
Compare the price of each policy with the cover offered – don’t go for a cheap deal with very little cover or pay top money for cover you don’t really need.
2) ENGAGE SPECIALISTS
Speak with your mortgage broker for options on the insurances related to your new property purchase – they may well be able to recommend a professional who can arrange the policies for you.
3) KEEP DOCUMENTS SECURE FOR FUTURE CLAIMS OR BENCHMARKING
Remember to keep copies of your insurance policies, receipts and photographs away from the house, as they won’t be much help to you if they are damaged or irretrievable.
Scan then into your email or Dropbox service to be able to access them easily