Household Insurance-Building and Content: “Your House, Contents, At-Risk Protect Them”

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 HOUSEHOLD INSURANCE-BUILDING AND CONTENT

“Your House, Contents, At-Risk Protect Them”




Scope


Generally, household policies are package policies known as a combined policy. They are combined, within a single document, a range of different covers; such as damage to the insured's property together with legal liability for injury to others or damage to their property. There are a variety of different household packages available, including; buildings only policies, contents only policies, buildings and contents insurance together within one policy which is a combined policy covering buildings and contents, plus a range of optional extensions (such as personal possessions and freezer contents), Chartered Insurance Institute (n,d.).  It should be noted that all the covers presented above in both building and content may not apply to your geographical location. Therefore, usually, insurance companies tailored the cover base on the geographical location of the proposer (client), the governing laws, lastly, depending on the risk-aversiveness or risk-tolerance of the proposer. 


Standard Household Insurance

According to the Malta International Training Center, (n.d.), the basic features of a household insurance policy covers the landlord or the tenant against; fire, theft, and special perils (injuries or damages caused by natural elements such as; rain, ice, snow, typhoon, hurricane, volcano, waves action, wind, earthquake or flood). With standard household insurance there are two claim settlement types; indemnity and new for old (reinstatement). For new for old a deduction can be made in certain conditions when the sum insured (the maximum value the insurance company can pay) is inadequate. 


What is a Household puts the Owner at Risk

An insured can choose to buy a combined policy that is paying a premium that covers; the -building, -content, and, -legal liabilities, that may occur or get separate covers for the three categories base on her/his risk exposure or finances capacity. It should be noted that it is always advisable to go for a combined insurance policy because it will be provided at a lower premium, unlike separates cover. Also, combine policies are easy to manage. We will examine the three major covers for a household insurance policy stated above.


A- Building Insurance standard peril cover

A household is defined as; “The main structure of the private dwelling (house, etc.) at the address shown in the schedule together with garages, sheds, greenhouses and other outbuildings used for domestic purposes”, Malta International Training Center, (n.d.).


The standard policy cover Malta International Training Center, (n.d.);

-Fire, smoke, lightning, explosion, and earthquake

-Riot, civil commotion, strike, labor or political disturbances, malicious damage, vandalism

-Storm and flood

-Falling aerials, trees, or branches

-Escape of water

-Escape of oil

-Theft or attempted theft (Full Theft cover) see the Theft Act 1968

-Impact (excluding insects and domestic pets)

-Subsidence, ground heave, or landslip 


Building insurance cover excludes loss or damage caused by:

These are perils or contingency specifically excluded from the terms of the policy:

-Normal shrinkage or settlement or the movement of newly made up ground.

-Faulty design, workmanship, or material.

-Demolition, structural alteration, or repairs to the home.

-Coastal or riverbank erosion.

-Movement of solid floor slabs

- Fixed fuel oil tanks, swimming pools, tennis courts, walls, gates, fences, terraces, patios, and drives.


Extensions 

Extensions are additional terms usually requested by the client (proposer) to better secure the risk at an additional premium. Extensions in property insurance are different from the extension of the policy term. Extension to a household insurance policy is, as stated in the  Malta International Training Center, (n.d.); Remember they are optional to the client (proposer)

-Damage whilst the dwelling islet.

-Damage caused by any paying guest.

-Wear and tear; settlement or shrinkage, atmospheric or climatic conditions.

-Gradually operating causes.

-Wet or dry rot, fungus, vermin or insects;

-Damage caused by faulty materials or design or poor workmanship.

-Damage caused by the demolition of or structural alteration or repair to the home.

-Any risk specifically excluded under the standard building’s section, such as storm damage to fences, etc.

-The excess is shown in the schedule.




B- Content Insurance standard peril cover

Content is defined as; “Household goods and personal possessions belonging to the insured, members of their household or resident domestic employees for which they are legally responsible”, Malta International Training Center, (n.d.). 

The standard cover under content insurance is the same as those cover under building sections stated above. 


Additional items of covers which are automatically included 

-Temporary removal of contents

-Contents in the garden

-Clothing and personal goods

-Glass and mirrors

-Cost of alternative accommodation

-Accidental damage to home entertainment equipment

-Household removal

-Frozen food

-Loss of keys

-Loss of oil or metered water from fixed domestic water or heating installation or washing machine

-Temporary increases in sums insured; to cover feast and gift.


Typical Exclusions of Contents insurance cover are:

-Property more specifically insured;

-Securities, certificates, and documents;

-Mechanically propelled vehicles (other than motorized gardening equipment and pedestrian controlled vehicles), motorcycles, caravans, trailers, watercraft, hovercraft, or aircraft, and their accessories while in or on them;

-Livestock and pets;

-Landlord’s fixtures and fittings;

-Property held for used for business purposes.

 

C- Legal Liability

The question one would be tempted to ask here is why buy a legal liability cover as part of a household risk. The question is simple legal liability can occur as the property of the insured may cause damage to a third party. Legal liability against the house owner/occupier may come in twofold use of the building and or use of the contents. It should be noted that insurance practice is greatly influenced by the law of tort. 


In the case of a building, liability to the insured as the property may cause damages, that may result in accidental injury and /or property damage to a third party. According to English law, this is governed by the Defective Premises Act 1972, Malta International Training Center, (n.d.).


On the other hand, content protects the interest of the insured as an occupier, rather than the owner, of the property. It covers liability incurred by the insured or any member of the insured’s household as occupier of the property or any other premises used for temporary holiday accommodation; and as a private individual in a personal capacity; and as an employer of domestic employees, Malta International Training Center, (n.d.).


The cover is in respect of legal liability for the accidental death of or injury (which includes death or disease) to any person and accidental loss of or damage to material property. Indemnity is to the insured and all family members permanently residing in the property, Malta International Training Center, (n.d.).



Standard Exclusions for a Household Insurance Policy; 

The standard exclusions to household insurance are; war risks, radioactive contamination, sonic bangs, pollution, terrorism, failure of computer equipment to recognize the true calendar date, confiscation of property, deliberate acts, existing damage that arose before cover started, Val, (2018).

 

According to Policy Expert, (n.d.), there are several exclusions commonly found in your average home insurance policy: Wear and tear, Poor maintenance, Negligence, Wrongly describing locks and alarms, Having lodgers, Non-disclosure of building work, Being away, Bicycles, Gates and fences, Loss or corruption due to software viruses. 


In a summary, home insurance cover can be purchase as a combined policy or purchase separately. There are the standard covers and extensions or add-on that could be requested by the client for an additional premium. Away from the standard policy, some exclusions could be purchase by the client as a separate policy to cover their risk. 



Newton Bezeng

Founder BeNew Insurance

Email: newtonbezeng@outlook.com

Website: https://benew.business.site

Blog: benewinsurance.blogspot.com

Facebook: https://web.facebook.com/Benewinsurance

LinkedIn: https://www.linkedin.com/company/benew-insurance

Twitter: @newtonbezeng




References 

-MALTA INTERNATIONAL TRAINING CENTRE, (MITC). (2017).

INSURANCE FOR THE PRIVATE INDIVIDUAL: PERSONAL INSURANCES. Module 2 coursebook.

-Policy Expert,(n.d.). What are Home Insurance exclusions?https://blog.policyexpert.co.uk/uncategorized/home-insurance-exclusions/

-Val, J. (2018). Household Insurance. Chartered Insurance Institute.

https://www.cii.co.uk/learning/knowledge-services/reference-resources/classes-of-insurance/household-insurance/

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