I was surprised to read recently that Jack Reacher novels hold the number 1 and number 10 position in the top ten adult fiction books borrowed from our public libraries.
If there’s one thing I like about the character created by author, Lee Child, pictured, is the motto: hope for the best, plan for the worst.
From my perspective, as a conveyancer, I appreciate its prudence when applied to all things real estate, especially in relation to home and contents insurance.
Let me explain.
Hope for the best
In the excitement (or stress) of buying a new property, it can be easy to overlook some of the ‘mandatories’ such as paying attention to insurance.
What’s more, because money can be a little tighter due to incidental costs involved in moving house, it can be tempting to put off the expense until later ‘when things get settled’.
But the underlying question should be: can you afford to lose everything if something unexpected goes wrong?
And that’s where Jack Reacher wisdom comes to the fore.
Plan for the worst
As professionals who spend all day working in the detail of real estate contracts, it can feel ‘unfinished’ if clients choose not to apply home and contents insurance from the get go.
At the very least, choose an affordable premium over nothing, but avoid the danger of under-insuring.
If money is tight, the irony is accidents and damage without insurance are things definitely unaffordable.
In this situation, some people opt for just Standard Basic Cover for Defined events and they go without the Top Additional Cover for Accidental Damage.
This means they are covered for things like fire, storm damage, vandalism, and water damage from basins, baths, pipes, tanks, etc, but not covered for those happenings like putting your ladder through a wall, foot through a ceiling, etc.
Some wise rules of thumbs regarding insurance
There are some good sources online for comparing insurance policies when it comes to health but many of the home insurance comparison sites take advertising from providers so their findings need to be treated cautiously.
Given that, here are some useful tips, in a matter-of-fact Reacher style:
- Sum insured policies pay up to amounts specified on certificates (this accounts for most policies on the market), total replacement means just that (even though policies will have some exclusions)
- Use your insurers calculator to make sure your premium is set to cover the actual replacement costs of your home and contents; skimp here and you might not get payouts or get severely reduced payouts should you ever lodge a claim (remember all the little things that add up – gadgets, DVDs, crockery, clothes, etc)
- When estimating costs of building replacement, remember to include architects, possible inflation regarding building materials if your whole area has been subject to a disaster, emergency accommodation, removal of debris, the list goes on.
- Even before you put an offer on a home, get some insurance quotes because some areas might be risk-prone and have higher than average premiums – and it is good practice to get three quotes anyway.
- If you can handle a slightly bigger excess, it could drastically drop your ongoing premium costs, but be realistic
- Good, clear pictures of valuable belongings and well-stored receipts will always make the claims process smoother
- When talking with your insurance company, take good, dated notes, or store/print out emails
- If you are confident your area is not prone to the official definition of ‘flooding’ then ask if your policy can be exempted – very few companies allow this
According to the regulations, the word “flood” means the covering of normally dry land by water that has escaped or been released from the normal confines of any lake, river, creek or other natural watercourse, whether or not altered or modified, or any reservoir, canal, or dam. (Source: Insurance contracts Regulations 1985.)
It’s also very important to remember that once you sign a Contract for a property as a Purchaser you have an insurable interest so contact your Insurance Broker or Insurance Company as soon as possible to make sure you have cover.
I hope these insights help you stay on high ground in relation to insurance cover and that your planning for the worst turns out to be unnecessary; something so much better than the other way around.