Home insurance — what is the standard cover?

What is included in the standard home insurance policy?

There are four basic elements in every policy. These provide cover against: (a) damage to the physical structure of your home; (b) damage to the usual run of possessions you keep in your home; (c) injury to any visitor to your home; and (d) hotel or other accommodation for yourself and family, and the additional cost of storing your contents while your home is repaired.

What is the physical structure of your home?

Home insurance does not cover damage to the land so, if your yard disappears into a sink hole, you have no claim so long as the foundations to your home are secure. The cover only protects permanent buildings. This would be the home itself and, if freestanding, a garage or shed. Any temporary structures are outside the standard policy. Cover for plants and trees is usually limited.

What exactly is the cover?

The policy pays to repair or rebuild your home if it is damaged or destroyed by one of the perils listed in the policy. This is usually routine weather events like wind, rain, snow, lightning, and so on. But what you recover is not the resale value of your home. You are only entitled to recover the actual cost of the labor and materials to repair or rebuild.

What about rented property?

This is something you should discuss with the owner of the property. The owner may well have a policy covering the structure, so all you need buy is cover for your own possessions.

What about personal belongings?

All the usual contents of a home are covered against accidental damage, theft or loss through fire or some other peril listed in the policy. Insurers usually offer an additional 60% of the value of the structure as an average value for contents. So if you have a $100,000 home and you feel your contents are worth more than $60,000, talk to the insurers. If you have particularly expensive items, they should be listed in a separate schedule.

Liability cover explained

If someone is injured on your property, this covers the cost of defending any law suit and pays out any compensation to the person injured.

Additional expenses

This is limited to avoid you taking advantage of the insurer. Hotel and restaurant bills will only be honored up to a weekly maximum for an agreed number of weeks.