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03 Nov

Raul Harman

Innovative enterprise consultant

A lot of people commonly ignore purchasing home insurance, or any insurance for that matter, as it's just an additional expense they have to worry about. Although people neglect insurance, they don't realize how important and essential it is until it's too late. For a small initial investment, you make sure that your property, which includes your home, its surroundings and everything in it, is financially insured against natural disasters, thefts, vandalism, etc.

Without insurance, you would have to pay for all the property damage repairs by yourself. Truthfully, no one can cover such an expense right away due to the unpredictable nature of the damage, even if you have an emergency fund for such occasions. Therefore, here are a few reasons why you should insure your home.

Covers legal responsibilities

One of the main reasons home insurance is so important is the fact that it gives you liability coverage. Most homeowners aren't aware of this insurance benefit, as they believe insurance solely focuses on property insurance. However, liability insurance is also a part of your homeowner insurance and it covers lawsuits and legal claims made against you in case of an accident.

That means that your insurance policy will cover the expenses of paying for damages, as well as legal counsel and legal representation. For instance, if someone gets injured on your property but doesn't fall under your insurance policy, they can make legal claims against you. Also, if your home catches fire and that same fire causes damage to neighboring homes, you can get sued. Without insurance, you'd have to pay for counseling and damages all by yourself.

Damage from natural disasters

Nowadays, natural disasters are more common due to global warming and climate change. Many homes are now more susceptible to property damage caused by calamities than ever before. It's important to know that standard homeowner insurance policies cover property damage caused by many natural disasters, but not all of them. For example, your standard insurance policy will cover damage caused by wind, lightning, hail, fire, ice, snow but it will not cover damage caused by floods, earthquakes and landslides.

It's important to understand this because if your house is located in the area that's at risk of being hit by a flood or an earthquake, then you'll have to deal with the damage yourself in case something happens. However, this coverage applies for standard insurances only; so, if you want to make sure your insurance covers damage caused by floods or earthquakes, you can consult with companies such as Youi NZ who offer custom insurance policies.

Other insurance benefits

Homeowner insurance policies are quite flexible in terms of covering your assets. Your insurance policy can also cover damage caused by thefts, burglaries or vandalism. In addition, damage caused by sudden malfunction of plumbing, air-cooling and heating, electrical malfunctions and other appliance damage is covered as well. Also, an insurance company will cover the expenses of staying at a hotel until the damage to your home is repaired, on some occasions even for twelve months.

However, you can insure almost every aspect of your home, but it will be included in the premiums you’ll have to pay annually. A premium is amount of funds you have to pay to your insurance company to maintain your insurance policy. What you choose to insure additionally is up to you, just make sure you understand what’s initially covered in your insurance policy and what’s not.

How to increase your coverage

As mentioned before, it’s important to understand what standard homeowner insurance covers and to what extent. Sometimes the losses caused by damage done to your home may not be fully covered by the insurance policy, such as the value of lost items or expenses of rebuilding your home from scratch. However, you can improve your coverage by adding additional endorsements to your insurance policy. For instance:

- Guaranteed replacement coverage - This will cover the expenses of completely rebuilding your home.

- Personal replacement property endorsement - This covers the expenses of replacing your property.

- Personal liability umbrella insurance - This increases the liability coverage above the coverage of your standard homeowner policy.

Scheduled personal property endorsement - This insures your personal items whose value might be more than what standard policy covers, such as, computers, jewelry, antiques etc.

It's important to make sure that your home and your possessions are properly insured and covered to avoid any inconveniences.

Homeowner insurance is essential to protect your home and its residents. It's not safe to gamble that a misfortune will avoid your home altogether. After all, if you're not insured, you'll have to cover your losses from your own pockets.


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