Finding the right cover for your properties

Editor

Buying insurance cover for your properties can be a difficult process. Lots of different companies out there are eager to give you the hard sell, but most offer very little clear, unbiased advice on how to make a good decision. How do commercial and domestic warranties differ? What do you need to get covered? What types of protection should you prioritize, and how can you be sure that you’re getting a good deal?

Commercial warranty

If you’re insuring commercial premises, you might need different types of cover, and it’s important to discuss this with potential providers. There are two reasons this type of warranty differs significantly from a home warranty. First, the activities your business engages in may mean your property faces different risks. Second, the property is likely to be unattended for longer periods of time. It’s important to be honest about the details of what you do when seeking quotes because keeping something secret in an attempt to get a better deal could mean you end up with a policy that’s ruled invalid and doesn’t pay out when you need it to.

Domestic warranty basics

Domestic warranty policies are based on the cost of rebuilding your home in the event that it incurs serious damage, taking into account the likeliness of such damage occurring. It’s worth noting that the cost of rebuilding may not be the same as the market value of your property. In addition, you’re unlikely to need to rebuild the land your property stands on, so you can subtract the value of that.

What your insurer is likely to end up paying for in practice is smaller-scale repair work to fix the damage. You will need to make sure that your policy is appropriate for the type of accommodation in which you live. If you own a condo, for example, your warranty will normally cover the potential cost of repairs to your property plus a share of the costs of repairing any damage to the building where your condo is located. If you live in a house with outbuildings or a separate garage, they should normally be protected under your domestic warranty policy.

No policy will cover the cost of normal wear and tear or cover you if you deliberately damage your home or it’s damaged due to serious neglect on your part. Moreover, most policies will not cover the cost of repairing wet or dry rot.

Add-ons to consider

There are several important add-ons you may want to include in your policy, such as:

  • Insurance for furniture and other items that may be stolen or damaged.
  • Cover for you being accommodated elsewhere while your home is being repaired.
  • Cover for accidental damage you cause to your property during normal day-to-day activities.
  • Cover for the cost of treating injuries incurred on your property.
  • Cover for your legal costs if somebody who has had an accident on your property sues you.

Flood and earthquake insurance

Most policies don’t provide cover for damage caused by floods or earthquakes. Some insurers won’t cover these scenarios at all, but if you live in a flood-prone or earthquake-prone area, you should be looking for one that does. You’ll need to purchase this as an add-on to your main policy. How much you have to pay will depend on the risk assessments for your area, which could change over time. If you have insurance for your home’s contents, you may need an additional policy in this area as well to cover for flood or earthquake damage.

Finding the right provider

For your warranty to be worth what you pay for it, you’ll need to know that if the worst happens, your provider will pay out promptly and give you as much money as you need (after any agreed-upon excess has been taken into account). You can start with a basic cost comparison for policy packages that cover your needs and then balance your home warranty cost against the provider’s reputation.

Be a good bet

You’ll be offered better deals by warranty companies if they know they can rely on you to make your payments on time and report any issues honestly. How can you do that? The single best way is to have a good credit score. This means that if you manage to improve your credit score over time, it’s worth looking around for a new deal.

If you have any problems with a warranty provider, you can get advice from your State insurance regulator. Making sure that you have the right warranty means you’ll be able to relax and know that whatever happens to your properties, you’ve got it covered.