Insurance Planning

General insurance

Home insurance

Home insurance covers you for damage or loss to your home. It insures your home for a particular value. For example, if your house burnt down the insurance would cover some or all of the cost to rebuild it.

Most homes are insured at their replacement value so any damage or lost property is replaced with new property of the same value. To determine the replacement value you could use your home’s market value less the estimated value of the land. Don’t forget to allow for any costs that might be incurred to clear the land, and also prepare the site to be rebuilt. Alternatively, you could use the cost of rebuilding your home to as-new condition.

The insurance company will ask you to specify the amount you wish to insure your home for. If your specified amount is undervalued, then at claim time the insurance company is unlikely to cover all your expenses resulting from the loss or damage. You would need to fund the gap in expenses yourself.