Purchasing a home and achieving home ownership can be exciting. It can take considerable time and savings to get to the point where you can afford to take out a mortgage and purchase a home. Buying a home is a large financial investment which is why home insurance is so important, and therefore is usually required by lenders.
Like other types of insurance, home insurance has its own advantages and drawbacks. Understanding the benefits home insurance offers and the downside that it has can help you decide on the coverage and protection you want provided by your home insurance policy.
Advantages of Home Insurance
- Covers significant damage. Home insurance policies provide protection for significant damage that the majority of people wouldn’t be able to cover out of pocket. Damages covered by fire, explosions, and lightning are a few examples of the protection offered by home insurance policies. Therefore, the policy also provides substantial peace of mind.
- Low deductible relative to repair cost. Compared to the cost to repair the home which could be hundreds of thousands of euros, the deductible is very low.
- Protection from lawsuits. If someone sustains an injury in your home or on the grounds of your property, you will not be legally liable to pay the cost of that person’s medical bills. Medical bills can cost upwards of tens of thousands of euros, so this aspect of home insurance is a major advantage.
Disadvantages of Home Insurance
- Cost. Home insurance is expensive. The premiums that would need to be paid each month can be high, so the cost to maintain a home insurance policy is substantial. These high premiums are partially due to the low deductible that you will have to pay if you need to make a claim.
- Doesn’t cover everything. Home insurance policies don’t cover every type of damage that your home sustains. Certain damages incurred by storms and flood damage in certain areas, for example, will not be covered by the policy. Therefore, it is important to read up on what each policy specifically provides coverage for.
- Terms and conditions. There may be various hidden costs of home insurance that policy holders are unaware of because they are buried in the terms and conditions of the policy.
Choosing a home insurance policy is a big decision for homeowners. Being aware of the advantages and disadvantages of home insurance and the coverage it offers may help you choose the policy that is right for you.