Home Insurance Needs To Be Seen As An Investment
56% state they only bought policy because it was a prerequisite for home loan.
A recent survey conducted by the Malta Financial Services Authority found how nearly one in every four people have never purchased home insurance and many of those who subscribe to Home Insurance, do so when taking out a loan, since this is imposed on them by the Bank. In fact, once the loan is fully paid, they stop paying their Home Insurance.
“If people were more aware of the benefits they get to enjoy when they take out a home insurance, they would certainly never look at it as an unwanted expense but as a wise investment,” says Tonio Montesin from Island Insurance Brokers.
Mr Montesin, who is a broker at Island Insurance specialised in home insurance cover explains that many people for example, are still not aware that when they take a home insurance cover that also includes contents, they would also be protected against loss of rent and alternative accommodation if the insured property is rendered uninhabitable following damage by an insured peril.
“Almost no one knows that an insurance cover can also refund a client the cost of advertising the loss of his or her pet anywhere in Malta!”
“Our homes are our biggest investment and as such, we keep investing heavily in them, embellishing them and making them more comfortable, welcoming and more in line with our idea of the perfect home. So, it remains a strange fact that notwithstanding how our homes appreciate in value, many people still choose to leave them unprotected without the appropriate insurance cover and prefer to spend money on other things rather than on protecting their most valuable asset with adequate Home Insurance,” he says.
“These people fail to see that a good home insurance actually, is not ‘money thrown down the drain’ but ‘an investment in one’s investment’,” he added.
The MFSA’s survey confirmed how the link between bank loans and home insurance cover remains very strong with more than 44% of respondents stating that they bought their home insurance policy when taking out a home loan and 56% saying they only bought the policy because it was a prerequisite for their home loan.
“When one considers that on average, a typical home insurance would cost around €1 a day, the natural question would be: is it really worth risking not having one’s home insured?” added Mr Montesin.
The MFSA survey also confirmed significant confusion among consumers when it comes to home insurance, where many are unable to distinguish between Buildings and Contents insurance and just under one in three are not able to name their insurance underwriter.
What would a typical Home Insurance cover?
“Typical home policies would contain 4 sections, namely the Building, the Contents, Personal Possessions and the Liability Section. The building section would cover the structure and all permanent fixtures, such as tiles, bathrooms, doors, windows, AC units and solar panel systems and more. Most underwriters would also include the kitchen though it is always advisable for one to ask his underwriter about this.”
“The Contents would include anything that is movable in a home, from furniture and appliances to TV, HiFi equipment, computers and clothing. There is then the Personal Possessions section which consists of the more personal moveable items such as watches, items of jewellery, mobile phones and laptops amongst others.
“Finally, the Liability Section which covers the actual owner of the insured property against any liability at law, arising out of his negligence should a Third Party suffer injury or damage to his person / property. Most policies will also include the Owner’s Liability towards Domestic Staff.
“The policy will then also state what the home is being insured against. The list of ‘perils’ under the Home Policy is a long one and it would typically include fire, lightning, smoke, earthquake, vandalism, storms and flooding, breakages theft or attempted theft, escape of water and oil from domestic appliances and more.
Are their indications that more people will keep their home cover policies?
Yes, the indications are positive. In fact, the MFSA’s survey also showed how most people today seem to appreciate their insurance cover more with 70% planning on maintaining their policy after they paid off their loan while 30% who have made at least one insurance claim, reporting a high satisfaction score of 3.96 out of 5.
People have started understanding the real value behind a typical Home Policy. As far as our customers are concerned, they are very happy with our service and know that we are always very open with them and willing to help them understand what they stand to benefit from their home cover,” concluded Tonio Montesin.
Island Insurance Brokers Ltd is enrolled to carry out insurance broking business in terms of the Insurance Distribution Act and regulated by the Malta Financial Services Authority.