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Not all Home Insurances are equal. The market offers many possibilities.

For this reason, it is important to have good advice to determine the best insurance according to your needs.

Choosing the adequate coverage is essential to manage the possible claims properly and to avoid the Proportional Rule.

Multi-risk Home Insurance

This is a fully comprehensive insurance policy that insures your home, its contents and your third party liability.

The multi-risk home Insurance includes a whole coverage of theft, fire, home accidents such us water damage from flooding, neighbors complaints, civil liability to third parties, etc.

This Insurace is composed by:

  • Content: Furniture, appliances, jewelry, valuables, paintings and works of art, etc.
  • Building: The reconstruction value of the new Building, flat or house subjected to the insurance policy.

Content

Those moveable assets, ie, not attached to the building structure are included in content. They are not considered as part of the construction.

It is basically furniture, electronics, clothing and other goods. In some goods of high economic value, such as jewelry or pictures, it is needed an individualized and detailed statement of them.

Food, groceries, TV antenna and supplies are also included.

Building

Buildings insurance covers the main structure of your home Those elements that are fixed and/or are part of the construction are considered Building:

  • Foundations, walls, ceilings, floors, etc.
  • Permanent fixtures such as water, electricity, heating and gas.
  • Doors and windows, closets, fireplaces and glass enclosures.

The following adherence parts are also considered Building:

  • Ceilings: suspended ceilings.
  • Floors: parquet, wood, pallets.
  • Windows and blinds.
  • Enclosing walls and fences, whether or not independent of the building.

Therefore, content coverages are mainly:

  • Fire, lightning and explosion.
  • Debris costs.
  • Burglary and robbery.
  • Breaking of glass.
  • Water damage.
  • Civil Liability.
  • Other.

Underinsurance

Underinsurance occurs when the insured amount is less than the value of the item.

In the case of Underinsurance, when a claim occurs, the compensation shall be calculated by multiplying the value of the damage by the ratio of the amount insured and the value of the item. This is known as Proportionally Rule.

Underinsurance is completely legal. In fact, it is very common. However, it should be known in advance in order not to not generate expectation in the payment of the premium. The proportional rule will be applied. In the event of total loss, the Insurance Company will compensate the insurer with the amount insured, which in this case is less than the value of the item insured.

Exemple 1:

  • Value of the item insured: 100.
  • Insured amount: 70 (the premium is calculated according to the insured amount. In this case, it is cheaper than if covering the whole value).
  • Damage: 70.
  • Compensation: 45 – (70/100) – 31.5.