Property insurance or homeowner’s insurance is the insurance which you take out on your home. This is generally mandatory when you have a mortgage since the bank likes to ensure that their bond is fully covered even if your house collapses around you.

Since your home is usually your biggest single asset it is not a bad idea to have it insured. It is, however, important to know exactly what is covered in the policy you take out and whether your claim is going to be paid with a smile or only after a protracted battle.

What is covered?

Your homeowner’s insurance should, at the very least, cover the building itself as well as all permanent fixtures and fittings against accidental damage or destruction. Ideally this should include damage caused by fire, lightning, flood, earthquakes etc.

You will find, not surprisingly, that insurance companies are loath to cover you against flood, for example, if you live on a river bank, or against earthquakes should your home be located in the proximity of a major fault line.

In other words, the greater the risk of damage or destruction the less likely it is that you will be able to insure against it. You also need to take into account the fact that your insurance company is unlikely to cover you for damages caused by war, strikes or riots.

Obviously, then, it is very important to be certain if there are any restrictions, exclusions or a disproportionate excess payable before you sign the contract, rather than discover these when you make your first claim against the policy.

What happens when you claim?

In an ideal world, presuming you had all your ducks in a row before you signed your policy document, making a claim would be a simple matter of filling in the forms and waiting for your payment. Unfortunately insurance companies are not quite as cheerful about paying out compensation as they are about collecting premiums.

This was borne out by personal experience: a claim for a carpet burnt when a pet accidentally overturned an electric heater was rejected on the grounds that it was an accident! Sarcastic queries as to whether a deliberately burnt carpet would be covered fell on deaf ears and only the threat to move both mortgage and insurance cover to another institute persuaded them to pay out what they owed.

Here are two other incidents which underline the reluctance of insurance companies to honour their contracts. An insured party had a pipe burst under the floor of his home. He immediately called his plumber who repaired the damage.

When he lodged his claim, however, the insurance company turned it down stating that he should have phoned their toll-free number for a list of service providers. In another flooding incident caused by a burst geyser the insured party was told that he could only claim for the water damage, not the geyser itself. This claim was paid out.

A year later he learnt that his brother-in-law had successfully claimed for a burst geyser and he contacted his insurance company, only to be turned down again, this time on the grounds of late notification! In both cases the clients refused to accept the repudiation of their claims and eventually won their cases.

Conclusion.

The moral of the story is firstly to ensure that you are fully covered and that all the ‘i’s’ and ‘t’s’ in the policy are satisfactorily dotted and crossed, and secondly, when you know you are in the right, never take no for an answer.