During our lives we all accumulate possessions; some are valuable assets and others are just scrapbook ‘mementoes’. If you were to sit down one day and make a list of everything that belongs to you and your household, you would probably be very surprised by how much you actually own. Now surprise yourself even more by putting values to each item on the list – suddenly you realise that you are actually quite wealthy. Imagine that for some reason all of these items on your ‘asset list’ were taken away and had to be replaced by purchasing them all again. It would take you another lifetime of accumulation to be able to afford this.
Now let’s make this possibility a reality. Suppose you had a major fire at home and you lost everything from furniture to clothing, including your valuables.
All you are left with is the clothes you are wearing and your watch.
Could you afford to buy all this all over again?
“That’s too drastic and would never happen to me”, I hear you say. Well, unfortunately it happens more often than we would like to think.
Alternatively, imagine a water pipe bursts and floods your home, damaging everything that is at floor level. This does happen quite often and, just to make it more damaging, we use salt water in Gibraltar, which never dries completely.
Do you remember the days when we could leave home and not even lock the door? These days even a locked door is not enough to keep burglars out. How many of your possessions would be targets for thieves? What about your cash, jewellery, electronics, artwork, or even some of your furniture?
Furthermore, if you or a member of your household caused someone else damage or personal injury, they could claim against you and make you liable for this. Just supposing you knocked your flowerpot off the window ledge and it fell on someone’s head below causing severe injuries. These days this would not just be put down to an accident and taken no further. This could actually be quite a substantial claim. Well, don’t panic, most home insurance packages do include public liability cover up to a limit.
Unfortunately there is no way to protect yourself against the emotional upset that something like this causes, but you can protect yourself against the financial loss. Home insurance is a good solution, where, for a relatively low premium, you would be able to protect your assets. You could even include your valuables, for example jewellery while you are wearing them away from home or even mobile phones, laptops, pedal cycles and golf clubs.
What about if you damage something accidentally – for example your friend’s dog has a go at your expensive Persian rug? You could possibly charge your friend for the damages, but this is a good way of losing friends! Well, accidental damage could also be included in a home insurance but this is usually optional.
Most of us in Gibraltar live in residential estates or communities where the insurance for the building itself is taken care of by the management committee, but yet in most cases we have to insure our own fixtures & fittings and tenants improvements.
However, those of us who do not live in communities should worry, since your home is probably your largest single asset. Just to make it worse, if you did lose the building, you would still owe the outstanding mortgage. Why do you think that mortgage lenders require building insurance to be in place? Sometimes we hear people saying that insurance is just a waste of money. Well, those are the ones who have never needed to claim – aren’t they the lucky ones!!! Have you ever noticed how when you carry an umbrella you usually do not need it, but when you do not have it, you can get very wet. Ask someone who has had a major fire or just a burst pipe whether his or her home insurance was a waste of money or not.
Some words of warning, however, not all insurance policies are the same, some are very limited and others are quite extensive. For example the cover may or may not be “New for Old” whereby in the event of a claim you replace your old damaged possessions with new items. Check that the cover you are purchasing is right for what you worry about. If in doubt, ask as many questions as you want until you are satisfied that the cover is good enough.
Another consideration is how efficient is the insurance company at paying claims? After all, that is what you are paying for, isn’t it? If it is not covered by the policy, the insurance will not pay at all, which is fair enough. But if it is covered, you need to be able to get the situation sorted out quickly and efficiently.
Once you have the correct cover available at a fair premium, just pay it and then you lessen your worry.