Home insurance: what are the types of policy?

Although it usually refers to a permanent structure, the place we choose to call home can be more or less anywhere and can be moveable. This is the place where we live and keep the possessions that make us feel comfortable. Thus, not everyone has the same needs when it comes to home insurance. The first and most obvious difference is between those who own the entire structure they occupy, and those who own only a part. There are many different styles of building which may see detached residences on their own plot of land or terraces of homes, each one separately occupied but sharing walls as support. The legal owner of a freehold title has a choice of policies. As an occupier, the decision is whether just to protect against property losses, or to provide more comprehensive cover against losses through third party claims. There will also be a difference if this is a second home, perhaps used for holiday purposes in a rural area. Where the home is not consistently occupied and there may not be so many neighbors to help make the area secure, this changes the nature of the risk. Similarly, if you as the owner rent out the property, you may want to scale down the cover and leave it to the renter to take out his or her own insurance.

Finally, a manufactured or mobile home is less secure and more prone to damage. This requires a separate policy.

If you own a condominium, the cover is mainly aimed at protecting contents. You will have to read the detail of the rules governing your particular condo to discover exactly what parts, if any, of the structure you should insure. This can be a difficult and complex issue and, if there’s any doubt in your mind, get independent advice.

If you rent your home, whether as a free-standing title or as an apartment or condo, you need to look very carefully at the terms of the lease to find out exactly what insurance you are required to carry. This will usually just be to protect your own contents but some owners require you to carry more cover.

Finally, there will be different considerations if you live on a farm or ranch or in some other building primarily used for commercial purposes. The type of policy will vary depending on the nature of the activity going on around you.

Home insurance: what are the types of policy?

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