An accident could cost you almost everything you own – home insurance protects you from the worst
It is not worth relying on good luck, as accidents can happen to anyone. Home insurance will not prevent damage, but it can help you avoid costs running into thousands of euros.
In Finland, hundreds of thousands of claims are settled each year under home insurance policies. Most of them are of little value, such as broken glasses and mobile phones. At the other end of the spectrum are water damage and fires, in which a resident may lose a large proportion of their possessions or, in the worst-case scenario, everything in their home.
Home insurance covers the resident’s property, i.e. the contents of the home. Fixed furnishings and other structural elements of the home, on the other hand, are covered by Heka’s property insurance.
Heka’s property insurance does not cover the resident’s personal belongings. That is why Heka strongly recommends home insurance to all its residents.
Head of Division Jussi Korpelainen of FINE Finnish Financial Ombudsman Bureau, which resolves insurance-related issues and disputes, emphasises the importance of home insurance.
“For a tenant, the worst-case scenario is probably that all their belongings are damaged by water or fire. Home insurance also includes cover for accommodation costs if there is a fire at a neighbour’s property and you have to move out temporarily. In addition to this, residents are supported by an organisation that specialises in insurance and can advise them on what to do in the event of a claim. Home insurance also helps in situations where it is unclear whether the tenant or the landlord is liable for compensation.”
The maximum compensation for damage to personal property is usually some tens of thousands of euros.
An accident always comes as a surprise
You can take out liability insurance as an add-on to your home insurance. It covers damage caused by the insured person to another person or to that person’s property. This usually involves damage caused by negligence.
“Even the slightest carelessness can cause serious damage – that is the essence of liability insurance.”
Home insurance is, generally speaking, property insurance. Liability insurance, on the other hand, excludes damage to the property of the policyholder, i.e. the resident.
If, for example, a tenant causes water damage that spreads to the apartments below, liability insurance will cover the damage in conjunction with Heka’s property insurance.
The damage may also be caused by a neighbour’s carelessness. For example, a fire that breaks out in a neighbour’s apartment could spread to your own home.
Korpelainen points out that an accident is always a surprise.
“A large proportion of claims are the result of a series of unfortunate events, and that is the whole point of insurance.”
Home insurance will not cover everything
Even the most comprehensive insurance policies include limits on compensation. The most common misconception is that comprehensive home insurance automatically covers everything when something goes wrong.
“In the case of damage to personal property, the line is typically drawn on aspects such as whether the theft of a mobile phone has been proven or whether the phone was simply lost. Nor will any damage caused by installation errors be compensated.”
Installation errors refer to situations where e.g. a household appliance that you have installed yourself causes a leak, the damage from which is not covered by the insurance.
“And it is certainly clear that the insurance does not cover damage caused by a deliberate act on the part of the policyholder.”
There are some differences in the exclusions in home insurance policies – i.e. the lists of items not covered – and the amounts of cover also vary from one insurer to another. When choosing insurance, you should make sure that the cover is appropriately tailored.
“It is worth thinking about what the most likely accident in your situation is. Key factors that you can influence when taking out insurance are the scope of cover and the maximum compensation amount for the contents of your household,” says Korpelainen.
Korpelainen therefore advises people to check the scope of their insurance cover and to familiarise themselves with the terms and conditions of their policy.
“You should read the safety guidelines in the insurance terms and conditions, which contain specific instructions on matters such as fire safety. It is important to follow the instructions, as compensation is typically reduced if they are disregarded.”
The most important thing is to ensure that you have the right level of insurance cover in place in advance.
“You will never be able to prepare for every eventuality, but a large part of being prepared involves ensuring you have adequate insurance cover,” Korpelainen emphasises.