Home insurance policy: not having it could mean losing everything

Our homes are the most valuable and expensive things we own, and ensuring they are protected in the event of an unforeseen catastrophe is likely a priority for most.

However, there is a lack of understanding amongst the public, of the different types of home insurance covers – namely, buildings insurance, which covers damage to buildings, and contents insurance, which covers the loss or damage of a home's contents.

MaltaToday spoke with the MFSA Head of Conduct Supervision Emily Benson who highlighted that, while you can legally own a home without insurance, having it is always a good idea, since it protects a lifetime investment which could be irrevocably lost in case of a disaster, such as a fire.

"When most people take out a home loan, the bank will oblige them to get home insurance. In this case, consumers should always clarify with their bank what the insurance policy is covering," Benson said.

"Once the bank loan is paid off, the home insurance usually stops being effective. And someone who is happy that they've paid off their mortgage might overlook the fact that they are now uninsured."

Home insurance policies normally cover loss of damage caused by fire, smoke, explosions, lightning, theft, floods, vandalism, and several other perils and risks.

However, consumers should always check with their insurers what their policy covers, since there is no such things as an "Act of God" in an insurance policy – the risks for which you are covered will be clearly listed in the policy, and any risk which is not mentioned is excluded.

It is also a good idea for homeowners to obtain quotes from different insurance companies, since cover costs can vary.

If an insured homeowner needs to make a claim, it is important that they contact their insurer as soon as possible, since a delay might prejudice their position.

Emphasising the importance of having a home insurance policy, Benson highlighted that people’s homes represented their wealth.

"The risk is that, if a homeowner doesn't have everything covered under their policy, or has no home insurance whatsoever, they would risk losing all their wealth," she added.

"And they would then not be able to replace this loss."

Five things you should know about home insurance

• The home insurance policy you are obliged to take out when taking a home loan to purchase your property, most of the time, only covers the building. Do not assume that the home insurance policy covers the building and the contents.
• You need to ask the policy provider regarding the coverage offered under the policy
• You can shop around to see which home insurance policy better suits your needs.  One can also buy the insurance cover for contents from a different provider rather than buying both covers from the same insurer.
• You should inform your insurer of any material changes to the contents of your building, including the sums insured.
• If you are living in a rented property, you can insure your own contents.

EXPLAINER

Buildings insurance vs contents insurance

Home insurance is usually split in two – buildings insurance and contents insurance. These are two different and independent insurance covers, so do not assume a home insurance policy will also cover your home’s contents.

• Building insurance:

Covers your home’s physical structure

Also covers permanent ‘fixtures and fittings’, including baths, fitted kitchens, windows and doors

Normally required by banks when taking out a home loan

Ask your insurer if you are unsure of what is covered under your home insurance policy.

• Contents insurance:

Covers any items which can be taken from one home to another, including furniture, electronics, carpets, paintings and jewelry.

An “All Risks” cover protects you against loss or theft of or an accidental damage to your personal valuables both inside and outside your home. Personal possessions that may be insured in this manner include photographic equipment, musical equipment, sports equipment, watches, jewellery, paintings, stamp or coin collections, etc.

The items insured under this section above a certain value will be identified on your policy schedule together with the sum insured for each item.

If you are unsure whether an item is part of buildings or contents insurance, ask your insurance policy provider to clarify.