“It’s not my fault…. Why do I have to pay the deductible?” This is a common enough question for homeowners with insurance, especially if you suffer a break-in or your roof gets hailed on.
And don’t forget – paying the deductible is the part of the contract you’ve bought. A Broadform policy insures your home “All Risk” on the house but not on the contents. If you buy top of the line Comprehensive Home Insurance (All Risk on both home and contents) and you lose a ring or spill paint on your sofas, that is also covered.
An insurance policy is a contract that offsets the costs in the event of accidental loss or damage. There are many details and rules about what is covered, and also exceptions to these rules. In reality, the more things covered under your policy, the more things are excluded.
As insurance is geared for the average homeowner, there may be instances where an item may have a monetary limit or where it may not be covered at all. In these cases, floaters or endorsement schedules can be used to greatly increase the protection and offer a lower deductible or no deductible at all. An endorsement can be added for jewellery, bicycles or even business items.
Also, a wide range of discounts are available. There are discounts for being claims free for a certain length of time, or if the home is mortgage free. There are also burglar alarm discounts, owners’ age discounts and non-smoker discounts, or eve having a new hot water tank. Many insurers now have discounts or credits for living in the home for a length of time or if extensive updates are done.
Other factors include the age of the home and the area it is located in, or if it is protected by a fire hall or hydrant. All of these things can have a dramatic effect in lowering the premium.
A fundamental underlying principle of home insurance is that it is concerned with the replacement cost, or rebuilding costs of your property. This contrasts with a tax assessment which is based on the retail or market value of a house. Most homeowner policies offer new or replacement property for old or depreciated property.