Understanding Property Protection Provisions In Your Home Insurance Policy
January 7, 2010
home insurance
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Paying your monthly premiums without fail isn't the only requirement for fiscally responsible home ownership. You must also understand what you're paying for so that you know what your responsibilities are. Where property protection clauses are concerned, it is helpful to understand the limits that apply to your insurance cover.
The term 'limits' refers to the maximum amount the insurance company pays on the policy in case of total loss. For example, if your home is insured for 100,000 pounds the insurance company pays you that amount if a fire burns your house to the ground.If your policy carries a 50,000 pounds cover for contents, you will be paid that amount if burglars clean out your home, taking everything except the building. If you carry 100,000 pounds of liability insurance, your insurance company pays up to that in case someone has an accident in your home and racks up medical bills anything beyond your 100,000 pound liability cover will be charged to your personal account.
A standard cheap home insurance policy provides for at least three types of cover and each has its limits as illustrated above. Let's look further into this cover and examine their limits.
Contents insurance: When you turn your house upside down and shake out its contents, whatever falls out is insured under your contents cover. Yes, insurance company pays for loss of your television, furniture and other items found in your home. Where contents cover is concerned, the limits apply to the maximum amount they would pay and the requirements for qualifying for such benefit.
For example, not every item in your home may be covered, sometimes high value jewellery is not insured by standard contents cover. Also, insurance companies may require an inventory of items you have in your home. If they do, anything that's not on the list is not covered under your contents cover. So be sure you know what these specific requirements are by reading the small print of your policy.
Home insurance: This is the amount your insurance company pays you for the value of your home, that is, the building itself. The limits apply under certain circumstances and for total loss. There are two ways insurance companies set the circumstances that limit their payment on this cover.
First, there's the named perils type of cover and limits definitions. As it suggests, under this type of cover, the insurance company pays for your lost property if the loss is due to the events stated or specified in your policy. If your policy specifically states, fire and flood only, then you do not get paid in case your home is destroyed by an earthquake! You shouldn't be complacent and think earthquakes only happen in other countries, the UK has its far share it's just that they really register very high on the Richter scale!
Second, there's the exclusions type of defining limits in your cheap home insurance. This is the conceptual reverse of named perils. In this case, whatever your policy expressly lists relieves them of financial obligation in the event of loss. If your policy excludes fire, for example, this means if your home is destroyed by fire, you won't get paid. If it gets destroyed by anything else, you get paid!
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