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Main Differences Between Fire And Home Contents Insurance
After buying a house, the next thing you would do is get some form of home insurance.
This is the smartest and one of the most mandatory things to do, yet there are a few confusing factors that bothers most real estate owners and prospective insurance buyers. Often people want to get all their valuables and commodities inside a house insured.
This can be done in 2 ways, but with different conditions.
1) You may take up property coverage on home contents
This will protect you against all sorts of damages done to your home, and give you full coverage on all valuables inside your home including valuables, antiques, artwork, etc.
2) You may also choose to take up fire coverage
This is just another branch of property insurance and acts almost the same way like the one for home contents, but only in the case of losses due to fire damage.
Confused? Let me explain them in details.
Fire insurance can be said to fall under a category of home content insurance. But general home content by definition is much broader than just fire. Since the most probable reason for a house to be destroyed is usually by fire, most home owners only see financial coverage for fire hazards are necessary.
Home content insurance protects all the things inside a home, apartment or house, and these include both living and non-living things.
All sorts of damages due to all types of factors, mishaps, accidents etc are covered here, and any valuable inside the home when damaged is repaired or replaced under the home content insurance coverage. For such comprehensive coverage, you can expect to pay a price.
Fire insurance fall under the home content or property insurance category, as this also gives protection against any damage of the contents in the home, and that too for both living and non-living content of the home.
However, it gives this coverage only upon destruction due to fire.
Any reason or factor other than fire won’t obligate the insurer to pay for any damage, repair, reconstruction or replacement. So in the instance that your home is destroyed due to a natural disaster like a hurricane, you will not be able to make a claim.
This is because all these details and terms are clearly stated before a home owner signs up.
If damage to the contents in a home happens due to any natural or man-made causes, the home contents policy covers for the damage totally.
If fire is the cause and because of any manly conflict then also the insured amount is paid.
Different companies can have different terms and conditions. A different country can also have varying terms and conditions. So before you ask for the moon from your agent, take into consideration that there is no universal rule or loophole you can play.
But if any war, violence or man-made factor is the case of a fire breakout, then the fire insurance policy won’t provide the coverage.
This is why we see movies on property owners committing arson to their own homes or warehouses hoping to make a windfall claim from the insurer. They will then be found out and be unable to get what they initially planned.
If this confuses you, your best action is to call up your agent for the details applicable to you.
Liability cover difference
A person, who is not the actual owner of a property, but stays under the permission of the owner, is also covered with all property and contents in the home under the home contents insurance; and this type of cover is called the liability cover.
If you are a landlord, take this into account.
But take note that there are other types of products that cater to the specific needs of a landlord or tenant. When you are running a business, it makes sense to plan for contingencies.
In the case of a fire related policy, there is no benefit to give coverage to an individual who is not the owner.
In fact a non-owner of a property may never own or opt for a fire insurance ever. This is to prevent individuals from abusing the system and profit from a payout without even being a stakeholder with vested interest.
If you are in a fire prone area and are concerned simply about a fire breakout due to bonfire or volcano etc, then you should better opt for fire insurance. This is an extreme example as who would insure a volcanic-prone house.
But you get the idea being brought across. Otherwise by no means should you have only fire insurance, and instead must include protection for home contents.