For most people, buying a house and turning it into a home is the biggest investment they will commit to in their lifetime. It involves a lot of research, house viewings, planning – and most of all, saving. 

So for most, the added burden of having to pay for home insurance is a bit of a nuisance. After all, paying a premium for something that might happen is usually translated into investing in something that will yield no returns. 

But what if something does really happen? What if that uncertain cause becomes a reality? Floods do happen, thefts sadly are a regular occurrence, and owning a house without a home insurance policy means that owners are neglecting the biggest investment that they have made. 

A home insurance provides coverage in the case of loss or damage to your property, and maybe the contents of your home too. 

There are two kinds of home insurance policy covers. The building insurance covers the structure of a building, including permanent fixtures and fittings such as baths, fitted kitchens, doors and windows. This type of policy is usually required by banks when financing the purchase of a property – and will no longer be required once the loan is fully repaid.

The home insurance policy may also cover the contents– the contents insurance covers any items that can be taken from one residential property to another, such as furniture, appliances, carpets, paintings and other valuable items. 

If the home is financed through a home loan, the bank will inform you that in order to take the house loan you need to have a home insurance policy in place.  After a home loan is paid off, one needs to decide whether they still want to continue with having a home insurance policy in place or not. But why should you cancel your policy and risk losing all that you have invested in your home? Do shop around to see which insurance company offers the best policy to suit your needs. You can also decide to buy the contents cover from a different insurance provider. Always check what is covered by your home insurance policy.  

Home insurance – the ifs and buts

What are the types of home insurance covers available?
A home insurance includes: a building insurance that covers you for damage to buildings; and maybe a contents insurance that covers you for loss or damage to the contents of your home; or an all risks insurance that covers both the buildings and the contents.  

What are the perils insured against under a home insurance policy?
Normally, the policy would cover any loss or damage caused by for example fire, smoke, explosion, vandalism. Check your insurance policy for the “perils” or “risks” covered as these may vary from one insurer to another.

What does ‘sum insured’ mean?
The sum insured is the total amount of money for which you are covered. It is the maximum amount your insurers will pay for all the claims arising out of one occurrence such as a fire or an explosion. It is very important that this sum is sufficient because if you are under-insured, claim payments will be reduced. 

How is the value calculated?
Under the ‘buildings’ section, you are insuring the actual structure of your home and usually include outbuildings for example garages.   It also includes fixtures and fittings which are all those things you would not take with you if you moved to another property.

Under the ‘contents’ section, you are insuring all the items in your home such as furniture, household appliances, carpets, cameras, home computers, sports equipment, jewellery, clothing, personal money and other valuables. 

It is very important that you inform the insurer of any material changes to contents or buildings including the sum insured.  

For more information visit the Malta Financial Services Authority website.