HOMEOWNER INSURANCE

A Guide To Homeowners Insurance

What is Homeowner Insurance

Homeowner insurance is a combination of both buildings insurance & contents insurance. If you have a mortgage by law you will have to take out a buildings policy which protects the bank & you for damage that occurs to the property. Content insurance is not compulsory. If there is any damage to your possessions then you are solely responsible for the cost of replacement. If this is a large item such as white goods, then this will be expensive.

Insurance in the modern sense i.e. methods of transferring or distributing risk, was practiced by Chinese & Babylonian traders as long ago as the 3rd & 2nd millennia BC, respectively. The need for risk management to protect ones possessions from a large & potentially devastating loss, was clear to even these civilizations. Homeowners insurance as we know it today is the legacy of Nicholas Barbon.

After the great fire of London, which devoured 13,200 houses in 1666, Nicholas Barbon opened an office to insure buildings, in the aftermath of the disaster to prevent such grave loss & devastation in future. In 1680, he established England's first fire insurance company, "The Fire Office," to insure brick & frame homes. The massive loss incurred in London in the aftermath of this tragedy showed the importance of insuring our homes. A number of companies have grown up on transferring the risk away from the ‘insured’, to be assumed by the ‘insurer’ in exchange for a small sum.

Surprising Facts.

Even though we have been taught lesions by the mistakes of history & have come a long way, it may surprise you to know:

– 35% of all homes in the UK do not have any buildings insurance, in the event of any serious damage to the property these home owners face high bills for repairs*.

– 25% of homes do not have content insurance, leaving residents open to financial loss for their possessions in the event of fire, flood, burglary, storms or natural disasters*.

– There were 52,000 domestic fires in dwellings between 2007 & 2008.

– The average home in the UK has a sum insured contents value of between £40-50,000, yet many have home owner insurance which provides an insufficient level of cover.

– In the UK there is a burglary every 20 seconds*. (*Office of National Statistics 2006).