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Associate Article

The two aspects of home insurance

There are two major aspects of home insurance, namely the building and its contents. Today insurance is like many other products in the finance sector. Competition is alive and well. The best advice to you the homeowner is to act slowly and shop around.

It’s certain that a lender will require you to take mortgage-insurance in case you suddenly without warning fall ill or are unable to work for some reason – you may have to look after a family member who has had an accident.

The lender has given you the loan on the basis that your income is a certain amount and your job is secure. If that income stops or falls dramatically, mortgage insurance can enable you to continue making minimum payments.

Once you’ve got your property you should insure both the building and its contents. Again the lender may make it a part of their contract that you insure the building with the lender. (If a fire destroys your property, its value plummets and you have nowhere to live or re-sell).

But if have paid off your mortgage, and sometimes even if you still owe some money on the loan, you can make a substantial saving on your insurance costs.

This is where the competitive market today can be of real benefit to you the mortgage-holder. Many insurers will offer a decent discount – some up to 15% - if you take both forms of insurance from the one vendor. You insure the bricks and mortar and you insure the furniture from the same company.

So keen are insurers to get your custom, they will offer a monthly payment scheme even offering different ways to pay. Some mortgage providers will add the monthly cost of your home insurance to your mortgage payments meaning one payment covers different services.

But again the best advice is to act slowly. Get expert advice and understand the terms of the loan. If you discover a better deal down the track and realise you can save serious money by switching, there may be a penalty for closing the mortgage within a certain time. The cost of buying out the loan may override the cheaper rates offered elsewhere. It’s best to stick with established providers, such as RIAS, for home insurance as the likelihood of the policy remaining secure and competitive is very good.





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