You have just bought a new home and it needs to be insured. The lender's biggest concern is that the loan will be paid off if you should die prematurely and that the building itself is protected against fire or other damage. In both cases you will be required to take out a mortgage protection life policy and buildings cover.
Contents cover, on the other hand, is not compulsory, but from the home-owners' point of view should be just as important.
Plenty has been written about choosing the correct life policy to cover the mortgage: should it be a level or reducing cover contract? Should it be in joint or single names if you are married? Do you want or need serious illness protection as well?
Unfortunately, buildings and content insurance seldom generates as much attention, despite it being more complicated, and home-owners are more interested in the cost of the premium than in going through the nitty-gritty of the policy document.
's new home insurance policy, which it has brought out in association with its insurance partners, Guardian PMPA, is a good case in point.
The home and contents package, which is available to any home-owner and not just AIB customers, is one of the most comprehensive on the market and includes: a 45-page policy booklet, an easy guide to the product which illustrates most of the problems which can arise; a basic explanatory brochure; a proposal form and claim form attached to step-by-step explanatory brochures; and a short guide to rebuilding costs. The pack also includes a card for your wallet which lists the insurer's emergency numbers.
This is a lot of reading, but considerable thought has gone into finding a way to make the subject digestible. It must be said that there is no easy way to buy the right home and contents insurance except to go through the policy documents. Home insurance is a very competitive market and most home/contents contracts - and these combination policies are by far the most popular now - can differ quite a bit, especially over the proportion of automatic contents to building cover, the excesses charged and the exclusion terms.
AIB has decided to avoid the most contentious area by leaving the contents claim open-ended so long as the building cover amounts to a sum no greater than £300,000. They have assigned certain limits to various items however: for example, you won't be able to claim more than £1,000 for freezer contents and any single valuable worth more than £2,000 will need to be specified individually on the application form.
What this means is that anyone taking out such a policy will no longer run the risk of under insuring their valuables, which can sometimes result in only a proportion of your claim being paid.
Nearly as important as getting the valuation of your building and chattel correct however, is checking to see what isn't covered by your policy. This particular policy document is extra clear about what is not covered highlighting all the exclusions side by side with all its inclusive features. Most of the exclusions are standard to all home insurance policies, such as any accidental loss or damage to the building caused by wear and tear, frost, fungus, insects and vermin, by faulty workmanship, defective design or materials etc.
What many people may not realise, however, is that while this and other standard policies will cover most damage to or theft of your property from genuine accidents or from genuine thieves, those clauses are invalidated if your property is unattended for 60 consecutive days or more.
Anyone taking a very long holiday should notify the insurer and arrange for a resident caretaker for at least part of the time they are away.
The rebuilding cost guide, included in this new insurance package is also something home-owners should look at carefully, especially those who have paid off their mortgages. In such a case, the lender no longer has an interest in ensuring that the property is fully insured. This is now the exclusive responsibility of the owner who should know exactly how much it will cost to rebuild the house (and outbuildings etc) in the event of a serious fire etc.
This guide recommends that the rebuilding costs of larger houses of 1,350 or more square feet should be calculated at between £55 and £65 a square foot depending on whether you live in a city, town or rural area. (Dublin is the most expensive area.)
Smaller houses under 1,350 square feet will cost between £60 and £75 to rebuild depending on location and these figures include the cost of demolition, construction, professional fees and VAT.
A detached garage will cost an additional £7,000 to rebuild while a garden shed should be budgeted in at £2,000. You should always add on for special features in your house, like solid wood kitchens, wooden floors and decorative ceilings and plasterwork. This can amount to an additional £11,500 in the case of a typical three-bedroom, semi-detached house.
