Household insurance, buildings insurance, contents insurance – there are many words used to describe the insurance which protects the building you live in and the things inside it, and it can all make your head spin. At Hollard, we don’t like confusion, which is why we’ve written this article to explain more about what each term means and the difference between them.
“Household insurance” is an umbrella term we sometimes use to group buildings insurance and household goods insurance.
Below you can find out more about each of these:
Buildings insurance
Buildings insurance is quite an obvious one. Also known as homeowners insurance, it covers the immovable structures on your property as well as permanent fixtures, fittings and improvements (such as walls, roofs, your swimming pool, gates, underground pipes and cables). The term “homeowners insurance” is also sometimes used to refer to buildings insurance.
If you rent a property you don’t need to worry about taking out buildings insurance, as this is the landlord’s responsibility because he or she owns the property. But if you’re buying a property, the bank or organisation that lends you money will usually make taking out buildings insurance compulsory as part of the home loan agreement.
However, you don’t have to take out buildings insurance with your lender or anyone they suggest − you can choose a different insurance provider. Also, if you’re buying a sectional title property you don’t need to take out buildings insurance on your own, as the body corporate does that on behalf of all the owners.
This all may seem like a chore but it means that the value of your property is protected if something happens that damages it such as floods, fires, earthquakes or another natural event (depending on your level of cover). You are also protected if malicious damage is caused to your building by burglars for example.
Another thing to bear in mind as the owner of the property is that you’re responsible for the maintenance of it. This means removing leaves from your gutters and fixing hairline cracks before they get worse. If you fail to adequately maintain your property and this negligence is material to the actual claim, your insurer may not pay you out. Read more about your maintenance responsibilities as a homeowner.
Household goods insurance
Household goods insurance, also known as home contents insurance, covers all your personal possessions which are inside your home and which belong to you and any family members who you are financially responsible for (such as your children). Remember that this insurance only covers you if the item gets stolen or damaged inside the house you have specified on your policy.
No one is forced to get household goods insurance, it’s a choice every person has to make. But if your possessions happen to get damaged or stolen, you’ll be in a serious bind and severely out of pocket, so it’s worth getting yourself covered. You can also buy something called all risks insurance, which covers valuable items such as your laptop or jewellery that you regularly take out of the house.
The best way of telling the difference between buildings insurance and home contents insurance is by imagining a giant coming over to your house and picking it up in his or her hand (eek!). If the giant turns your house upside down and gives it a good shake, everything that falls out, like your TV, computer, clothes, fridge etc would fall under household goods insurance. Everything that remains behind in the house, like your wall-to-wall carpets or sinks or light fittings would be classed under buildings insurance.
Now that the giant has finished shaking your house, maybe it’s time to get yourself covered by either buildings insurance or household goods insurance. Get in touch and we can help.
