Learn More About Building and Content Insurance Policies

Building and content insurance is the perfect way to protect your most valuable asset, your home and everything inside it. Of course, these types of policies, often referred to as homeowner’s policies do more than just protect your house and contents, they protect you from losses you might incur if a tree falls on your garage. The policies also protect you from the cost of a suit if your neighbor falls in the garage. Building and content insurance on your home or place of business is one of them most important investments you’ll make.

Because building and content insurance varies by the type of policy you select, you need to investigate all policies offered by companies. Most homeowner’s opt for policies that include coverage for almost every peril. These are top of the line policies called HO-3 policies. All homeowner’s policies begin with the letters HO and standardized throughout the industry. This allows you to compare the building and contents insurance coverage without having to read all the fine print.

The policies for building and contents insurance start at HO-1 and go through HO-8. Of course, just to make it interesting, there is no HO-7. HO-1, HO-2, HO-3, HO-5 and HO-8 are traditional coverage for homeowners. HO-1 gives you only coverage against fire and lightening damage so if you have a theft, you’re out of luck. HO-2 policies expand the coverage. These are broad building and contents insurance policies.

You’ll note the coverage for the HO-2 policies includes building and contents insurance against named perils such as fire, lightening, windstorm, theft, explosion, smoke, vandalism, damage occurring from aircraft of vehicles and malicious mischief. It also covers damage from building collapse, civil commotion or riots, collapse due to snow or ice and water damage from plumping.

The broad coverage in this building and contents insurance policy is good but the HO-3 is far better. This policy covers everything not specifically named in the exclusion sections of the policy. The common exclusions for HO-3 policies include water damage from flooding or sewer backup, loss due to ordinance or law, such as losing a house to demolition because it’s not up to code, earthquakes or natural ground movement like sinkholes, loss from war, nuclear hazard, neglect or power failure. However, often you can purchase a rider to cover your frozen items in the event of power failure. Of course, the policy won’t cover you if you set a fire to your house or did other intentional damage just to collect. If you lose your home to governmental action such as seizure of property, they won’t pay either. The last item not paid by insurance companies is damage that came from faulty maintenance, bad workmanship on repairs or improper zoning.

While the HO-3 building and contents insurance covers the building for all but the named perils, it doesn’t cover the contents. In order to make certain you have complete coverage on those items, you have to purchase an HO-5, which offers open coverage on not only your building but also the contents. The HO-3 only covers the contents for perils named in the policy.

Even though there’s another policy for building and content insurance that has a higher number, it doesn’t mean that it’s better. The HO-8 is not necessarily better or worse than the others are. This building and contents insurance policy is for older homes. While you can easily evaluate the replacement cost of newer homes by the amount of cost per square foot, you can’t evaluate the older homes the same way. Some of these homes are huge but old. To replace the structure would cost thousands of dollars more than the worth of the home. The policy cost would be outrageous and the thought of getting those huge dollars for a loss would tempt many homeowners to take rash actions. To avoid both problems, the insurance companies created the HO-8. The policy uses the true market value of the home for the amount of coverage.

The other types of homeowner’s insurance don’t necessarily cover buildings and contents. The HO-4 is a renter’s policy that specifically covers the contents of someone that rents their living quarters. The HO-6 is a policy for condominium owners and covers items the association doesn’t cover. Regardless of the type of policy you get, you need coverage for you home and valuables. Not only do homeowner’s policies provide building and content coverage, they also provide liability coverage to protect you in the event someone injures himself at your home and then files a suit against you. It only takes one accident, fire or major storm to wipe out that valuable asset you call home. For just a few dollars a day, you can rest well at night knowing that you have the insurance company protecting you from losing everything.

How To Find a Property

Seek and ye shall find a property, whether it’s the deal you want or not is another matter. It’s all too easy to get into a cycle of searching and never making a decision on buying. When we have the money in cash or bonds that can be redeemed easily the auction market can be the place to find a property bargain. You need to have made your mind up well before the auction on the price you are willing to pay. You need to have done all your due diligence when you find a property. There’ll be no opportunity to back out. That doesn’t happen at auctions, when you put a bid on a property the auctioneer can start a buying frenzy so that every other bid increases the price on the property you want. It could be that you have looked long and hard to find a property but it’s snatched from under your nose by someone who just has that extra few hundred pounds to secure the bid. Should you be lucky enough to secure the winning bid then you will be expected to leave bonds to the value of at least ten per cent and be expected to complete the deal usually within twenty eight days.

“The beauty of auctions is of course the excitement and the possibility of getting a good deal but placing a winning bid is not for the faint hearted.”

Spending somebody else’s money is far more interesting but clients quite rightly expect value for money. When the gavel comes down on your bid it’s your property and that bonds you to it so there’s no chance to change your mind. There are plenty of property lemons sold by this means and if you have doubts about the structure or foundations when you find a property it’s most likely the reason it’s in the auction. Having said that there are generally one or two sweet deals to be had from every sale. It can be difficult to find a property even for your own residence let alone investment purposes. We have a client now who is asking for help finding a home as she can’t come across the property she wants in the area she wants at the price she wants. That doesn’t mean you can’t bid yourself as the criteria for entrance to auctions are usually fairly minimal.

We don’t object to doing a ‘find a property’ service as most of the reports we hear are of people who search and struggle to put deals together especially in the South where prices are so much higher. For that reason we suggest buying where the prices are more conducive to higher yields as cash flow is the all-important goal until the market starts to move again. Buying at the right price is the first principle of getting a good deal no matter what your intention for the property. To create the financial freedom so many desire your money has to work hard for you to make you more and more money. The opportunity to earn passive income to pay for your desired lifestyle is easier now through property than ever before. It also gives the ability to work when you want so giving a lifestyle choice that few have in this day and age. Whatever the chosen vehicle to wealth the attitude has to be right.

There are certain criteria to winning the property game. To create the life you want, you need to know the amount of financial success you want to achieve. With the intention to create wealth and abundance comes the need to admire and model those who are already rich and successful. Belief in property as the vehicle to produce your freedom and wealth is essential for the long haul especially if you’re working alone to find a property. To get rich doing what you love is far easier than doing something that you dislike. When you add value to a property or even just provide a home for your tenants, you are adding value to people’s lives and so deserve to be adequately compensated along the way. With wealth comes responsibility and the willingness to be generous as well as the capability to receive more. Gratitude and appreciation for what we have now will produce more of the same as the law of attraction will bring those lucrative deals and opportunities providing our capacity to earn grows with our ability to learn.

Some of the overseas opportunities are starting to look good again. With the Euro going down and the big drop in Spanish property values anyone with cash could do very well at the moment. Property is a long game, perhaps the refurbishment projects could be seen as a quick buck but in the main we have to build property wealth over the years. The sooner you start the sooner you can cash in or cash out as the case may be. Planning how we are going to exit a portfolio can be a good place to start your strategy to build it. Working with a plan is far easier than just going with the flow as there can be plenty of ebb too. Tax can be a major burden for the uninitiated, if you are not savvy in these areas take some valuable advice to save you heartache down the line. The way you build your portfolio and the types of property you own can make a massive difference to your end plan so don’t let the bonds of property tie your arms behind your back; consult with someone of experience. Try to get involved with a joint venture partner to take some of the responsibility off your shoulders and help you learn the right way to do things. Everyone can bring their own area of value to a partnership so finding the right people to work with can be a big help especially for those new to the game. Even with years of experience you don’t necessarily have the right energy to do what is necessary.

“Always look to find a property and a partner for success.”

The Protection of Buildings and Contents Insurance

You might have watched it aghast on the television news, you might even have lived in a street where fire ravaged a neighbouring house. The fact is that catastrophic accidents may happen to anyone’s home, destroying both the fabric and its contents in one major disaster. Furthermore, fire is just one of the perils covered by buildings and contents insurance, which – depending on the policy chosen – may typically also protect the owner against such risks as flooding, damage caused by water or oil leaking from burst pipes or tanks, storms, subsidence, vandalism, riots, falling trees, aerials or satellite dishes, and even impact damage caused by vehicles or animals.

The protection offered by building and contents insurance, therefore, may cover a valuable home and all of its contents against a huge range of risks.

  • How much cover do I need? – the amount of cover needed is likely, of course, to depend on the value of the property and its contents. This might seem completely self-evident and a simple matter of common sense. It is surprising, though, that some home owners are either under- or over-insured when it comes to buildings and contents insurance. The problem often stems from the way in which the valuation of the building and contents has been made and the need to take into account the actual cost of rebuilding from scratch or replacing lost or damaged contents;
  • Re-building and replacement – in matters of insurance, it is generally prudent to take the worst case scenario. Specifically, in this case, that means the total destruction of the insured buildings and their contents (fires, floods, and other calamitous events may not be widespread, but neither are they that uncommon). The insurance cover, therefore, may need to be sufficient to rebuild the destroyed property and to replace the lost or damaged contents.

Rebuilding costs, of course, are unlikely to be the same as the price at which the home was bought (especially if that was a number of years ago) and is likely exclude the price of the land on which re-building needs to be done. Professional valuations of those rebuilding costs as time goes by, therefore, may prove sensible.

Similarly, the valuation of the home’s contents also needs to be realistic and kept up-to-date. When considering contents insurance, it may be important to recognise that some forms of cover are restricted to compensation based on a “fair wear and tear” basis, so that the compensation in the event of a claim diminishes over the years as the insured items become older, whilst other buildings and contents insurance packages provide for the actual replacement of lost or damaged possessions. In either event, however, it is important that the whole of the insured contents are accurately valued, since any under-estimate may result in your receiving only partial compensation in the event of a claim;

  • Additional features – the market in home buildings and contents insurance is keenly competitive and some insurers offer more extensive and wider ranging cover than others. Some of the additional features which it may be worth considering, therefore, include those that cover the cost of alternative accommodation (in the event that the insured building becomes uninhabitable until rebuilding or refurbishment), the contents of any sheds or outbuildings, together with garden plants and furniture, and cover for any business equipment that may be kept or used in the home.