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FRIDAY, JULY 2, 2021

When does my homeowners insurance not pay for damages?

When does my homeowners insurance not pay for damages?

Homeowners insurance does not pay out for these types of damage

In some cases of damage, the homeowners insurance does not pay. Generally excluded are:

  • Damage caused intentionally
  • Damage caused by trickery
  • Damage caused by nuclear energy or radioactive substances
  • Damage caused by acts of war, civil unrest or rebellion
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    There are also special events among insured losses that are not insured. These include, for example, damage caused by splashing water. Damage caused by splashing water can occur when water penetrates a dilapidated joint drop by drop over many years, resulting in consequential damage to the household contents. Therefore, always read the insurance conditions of your home contents insurer carefully.

Premium amount of the homeowners insurance

The premium amount for homeowners insurance depends primarily on the desired scope of benefits, the sum insured and various risk factors such as the place of residence, the size of the apartment or the age of the policyholder. If you live in the country, the insurance company usually assumes that there is less burglary in your area than in the big city. Younger customers are usually granted discounts by the insurance company because their household contents often do not yet have a high value. The amount of the chosen deductible also affects the premium.

Inexpensive basic insurance policies based on the size and location of your home are available for annual premiums starting at less than $40. If, for example, you want to include natural hazards, an expensive bicycle and gross negligence, the insurance premium increases significantly to around $130 or more per year.

Rule of thumb: coverage amount

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You can calculate the value of your household contents based on a rule of thumb: per square meter of living space, set $650. For a living space of 100 square meters, this results in a sum insured of $65,000.

By choosing the right sum insured, you avoid underinsurance and receive full reimbursement in the event of a claim. However, if you own valuable luxury items (for example, jewelry, paintings, expensive wines or watches), the square meter lump sum may not be sufficient. This is because there are compensation limits for individual items. Our insurance specialists will be happy to help you choose the right coverage amount for you.

Compensation limits in homeowners insurance

If you are in possession of valuable items, it is important to explicitly name them to the insurance company. This is because in the case of luxury goods, the amount of compensation is not based on the replacement value, but on an indemnity limit for individual items, which is defined by the insurance company. This compensation limit is based on the amount of coverage.

For example, if the total coverage amount of the insurance policy is $100,000 and the compensation limit is 20 percent, then you will only receive $20,000 for the stolen Rolex, which would actually be worth $25,000, in the event of a claim. Insurers often offer separate tariffs for luxury items, which have higher coverage amounts per item.

Excursus: New value and current value

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The homeowners insurance is a new value insurance. This means that the homeowners insurance replaces all household items at the price they would cost if you had to buy them new. If, for example, your neighbor’s washing machine above causes water damage to your good Berber carpet, your household insurance will pay you the price at which you would purchase a new carpet of the same size and quality. How old and worn the carpet was before the damage is irrelevant.

However, there are exceptions: For items that you can no longer replace with like-new items, such as paintings or antiques, the homeowner’s insurance will reimburse the replacement value of a comparable item of the same type and quality. Under certain circumstances, you may even receive more money from the insurance company than you paid at the time. This is because antiques often increase in price over the years. Keep in mind, however, that you will only be paid out up to the limit of indemnity. If your antique Biedermeier sideboard is worth $5,000 at the time of the loss, but the compensation limit is $1,000, you will be left with a large part of the loss. Separate insurance is often worthwhile for such items.

Liability insurance or motor vehicle insurance, on the other hand, are current value insurances. These insurances compensate damages to insured items in the amount they would yield in pristine condition on the current market. The best example is a total loss on a ten-year-old small car: In this case, the car insurance will pay you the price at which you could buy the car on the current used car market, rather than the price the car cost as a new car ten years ago.

What happens to the homeowner’s insurance when I move?

If you move, you should inform your household contents insurance immediately - ideally even before the actual move. This way, both apartments are insured for two months in the event of a move. To do this, simply inform your household contents insurer of the address and living space of the new apartment. The homeowners insurance will then be transferred to your new apartment, if you wish.

If the new apartment is significantly larger or in a different part of town than before, the insurance premium may change and possibly increase. If you do not agree with this increase, you have a special right of termination. You can then cancel your homeowners insurance within one month of receiving the new premium calculation.

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Outdoor insurance: Insurance cover during the move

If your household contents are damaged during the move according to the insurance conditions, then the insurer will pay for the damage via a so-called external insurance. Outdoor insurance is part of every modern homeowners insurance policy and covers items against damage that are temporarily not in the home. This is the case when moving house, as well as when on vacation.

For detailed information on the sums insured in the external insurance, take a look at the insurance conditions of your homeowners insurance.

Proper homeowners insurance in no time at all

Overinsured, underinsured, insured just right? Home contents insurance does not always make things easy for its policyholders. Many clauses, exceptions and criteria such as the compensation limit for individual items make it difficult to see whether the existing insurance cover is sufficient and whether the new insurance will deliver what it promises in the event of a claim.

Our insurance specialists know exactly which stumbling blocks you should look out for when taking out home contents insurance. They help you to correctly assess the amount of coverage so that you are not underinsured in the event of a claim and do not experience any unpleasant surprises.

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