Property, whether an investment or your new home is a significant asset that needs protection from the outset. Finding the right insurance cover is an important consideration in the property buying process.
What type of property insurance do you need?
There are at least as many property insurance covers as there are property types. Your lender may have an 80% stake hold in your property. For this reason, you’ll be required to provide sufficient protection of your, and their asset.
Your loan contract conditions will specify the types of insurances you’re obligated to take out to protect the lender’s interest in the property.
In this article, we’ll cover the three essential types of insurance that you’ll need.
Building or home insurance: what you need to know
Building or home insurance protects your property and fixtures from damage. It is the most likely insurance specified in your home loan contract. If it isn’t, it is highly advisable to get building or home protection.
Building or home insurance:
Covers the cost of restoring your property and fixtures from damage: don’t underestimate these costs, you don’t want to be out of pocket if an event happens.
Offers different levels of cover and associated premiums: a number of levels of cover will be available. Check the lists of inclusions and exclusions carefully. For example is fire, flood and storm damage covered?
Mortgage Protection Insurance: what you need to know
Mortgage Protection Insurance protects you by helping cover your mortgage repayments when you no longer can.
Mortgage Protection Insurance:
Isn’t mandatory: borrowers aren’t obligated to have this insurance.
Helps cover mortgage repayments when you can’t: if your ability to work is impeded by serious injury or illness, the insurance goes toward the cost of your mortgage repayments, giving you time to regain your health so you can go back to work.
Contents insurance: what you need to know
Contents insurance protects you in the event that your personal belongings and items in your home are damaged, lost or stolen and need to be repaired or replaced. Whitegoods, clothing, furniture and jewellery are examples of items that you may want to protect.
Already have it? Update it: if you’ve just bought a property, it is likely that you’ve gone through a process of discarding old contents and replacing with new. You want to make sure the new items are covered by your contents insurance.
Offers options of replacement or reimbursement: depending on the premiums that you can afford to pay, based on the value of your contents, you will have the option of choosing to replace damaged or lost goods with new goods; or receiving the depreciated value of the items that were damaged.
How to find the right insurance
Because of the vast number of insurance policies available, it is really important to take your time to research and shop around carefully.
Identify some worst case scenarios for you and your family that could really impact on you financially. Then identify the insurance cover you would need, listing the inclusions you want covered. It is easier to shop around knowing what you want first, rather than looking at what is available and feeling overwhelmed with options.
Insurance is an exemplar of ‘you get what you pay for’. Cheap premiums are usually best avoided – they’re fine if nothing ever goes wrong.
Quality mortgage brokers can also provide information and recommendations of insurance professionals that can match you up with insurance policies that suit your circumstances.