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Insurance 101

Insurance basics: introduction

Acquiring assets is part of your life’s journey. That means that protecting your future is just as important as building it. If your assets are incorrectly insured or if you don’t get the right advice, you may be wasting money or even worse, risking financial ruin.

But, we’re here to help! We make sure that your assets are correctly insured, fully understanding the risks, the availability of cover, and most importantly, the insurance policy itself.

When exploring the right cover for your home, its contents, your liabilities, and your car, you’ll see there are many policies to choose from. Remember, not all policies are equal: policies differ in the type and level of cover available.

That’s why it is important to speak to a fully licensed and accredited representative when deciding. Our friendly and dedicated service consultants are standing by to answer any queries you may have or to help you obtain a speedy quotation.

What is a car and
home policy?

Well simply put, it’s a policy that covers your private vehicles, your residential buildings, your home contents (personal property), and your personal liability all in a single contract.

We sometimes call this a personal combined policy. The contract (between you and your insurer) is made up of three documents.

The proposal form

This is a document where you detail the risks you wish to insure, giving information about their security and your previous history of losses (insured and not). You are required to disclose any special aspects of your risk that the underwriter may not be aware of. This helps to make sure you are fairly covered.

The policy wording

This document, usually printed, is issued to all applicants for insurance. The Terms and Conditions that make the cover unique to you are found in the policy schedule.

The policy schedule

It details what you have elected to cover. It lists your premiums and other important information such as the disclosure of fees or any revised Terms and Conditions that may override the policy wording (known as endorsements). This may also include the policy extensions, exclusions or warranties.

Types of car and
home insurance policies

Homeowner's Insurance

Make sure you’ve got your house covered to protect the future of your home. Homeowners insurance covers you for loss or damage to the buildings, walls, and paving including all fixtures and fittings, usually on a specified “perils” basis that includes acts of nature.

The “perils” are usually fire, storm, flood, theft, malicious damage, water leakage, and accidental damage to sanitary ware and windows.

Our product greatly increases the scope of cover, as it is issued on an “all-risk” basis (providing full accidental damage cover).

The following test is generally used to work out whether the item lost or damaged falls within the homeowners or home contents section: can the fixture reasonably be removed and taken to a new home? If no, then it is covered by building insurance.

It is important to make sure that your sum insured is enough to replace all the buildings and structures on your property (at the time of final reinstatement) or you will be subject to an average.

Comprehensive Car Insurance

Firstly, this covers own damage, which is accidental damage to your own vehicle including loss by theft or hijacking.

To offer you the fullest and most comprehensive cover, it also covers you for Third Party liability – where you may become liable for damaging someone else’s vehicle or injuring someone through an accident involving your vehicle.

Home Contents Insurance

The assets inside your home are just as important to you as the house itself. This insurance covers loss or damage to the contents of your home, usually on a specified “perils” basis, that includes acts of nature.

The “Perils” are usually fire, storm, flood, theft, malicious damage, water leakage, and accidental damage to glass tops and mirrors.

Personal property includes everything movable such as furniture, furnishings, household goods, kitchen equipment, frozen food and drink, televisions, video, computer and audio equipment, clothing, personal items, and valuables up to stated limits.

Our product offers a greatly increased scope of cover, in the full accidental damage option “all-risks”.

This product also allows a limited amount of coverage for business property.

For a reduction in premium, you may decide to insure on a specified perils basis. Make sure you value the contents of your home in total – that is, how much it would cost you to replace everything in your home as new if a fire burnt down your entire house.

Third-party Car Insurance

This covers you where you may become liable for damaging someone else’s vehicle or injuring someone through an accident involving your vehicle.

Third-party, fire, and theft Car Insurance

This covers you for own damage by fire, theft, or hijacking of your vehicle. It excludes accident damage to your own vehicle.

It also covers you when you may become liable for damaging someone else’s vehicle or injuring someone through an accident involving your vehicle.

Combined policy

There’s no need to have separate policies to protect your hard-earned assets.

These policies combine all, or are a combination of, the homeowner’s house contents and vehicle policies into one single policy. The combined policy can be extended to include all-risks, personal liability, and other various covers.

The benefit of this is that the car rates can be discounted (by up to 30%) due to the low-risk sections (building/house contents) being included in the policy. A car-only policy is usually more expensive and should be avoided unless completely necessary.

The value of your asset

Sometimes terms and jargon just add to the confusion. But it’s necessary to make sure that you are paying for the right kind of policy, and that it is detailed in your policy schedule, when taking out car or household insurance. Brush up on the terms below before making any decisions:

Insured amount

This is the value that is reflected in your policy schedule (but not necessarily the amount that you would receive in the event of a claim/loss) and usually denotes the absolute limit that an insurer will pay.

New replacement cost

This is the cost to replace the item with a new one.

Agreed value

This is a value that has been agreed between the client and the insurer. Insurers are reluctant to do this and will only agree under exceptional circumstances.

Trade/book value

This is the value that a dealer would buy your second-hand vehicle for to resell it at a profit.

Retail value

This is the value at which a dealer would sell a second-hand vehicle.

Market value

This is the average between trade and retail values.

Momentum Insurance Company Limited is an authorised financial services provider (FSP 30414) and part of Momentum Metropolitan Holdings Limited.

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