Most new home buyers are likely to ask “What insurance do I need and how much do I need?” This answer to this question can vary depending on your personal circumstances and who you ask.

You will in most instances need the following types of insurance cover:

• Homeowners Insurance – which covers the building and other structures
• Contents Insurance – protects your household items like furniture and personal belongings
• Life Insurance – insurance on the life(s) of the bondholders

Homeowners Insurance

You will need to insure the building and other structures. This will be a condition of your mortgage loan and often the bank provides this cover through their insurers and simply adds the premium to your monthly mortgage repayments. This is intended to protect the bank as well as you, consider the financial implications if your house were to burn down, but you were still liable for the mortgage payments for the next twenty years. Now that would really hurt. Although in most cases the banks arrange for this and simply add the premiums to your monthly mortgage repayments you can insist to arrange this cover through your own broker or insurer.

Contents Insurance

You will need to insure your household contents against loss – this is not required in terms of your mortgage loan, but should still be considered an essential component of your financial portfolio considering the level of crime that most people deal with. If you include you motor vehicles with this cover you overall premium will be a lot lower than if you were to insure each risk separately – it also makes sense to include your homeowners insurance at the same time.

Life Insurance

This is also referred as mortgage protection cover and in the past banks would make it a condition of granting you a mortgage loan resulting in a steady stream of business for bank brokers. Banks no longer always make it a condition of granting your home loan, but may do so in certain circumstances. In any event it is good financial planning to have life cover to protect your dependents, imagine the strain on your dependents if you were to die and still leave them with hefty mortgage payments. You can also add disability cover which pays out if you are incapacitated and are unable to work thereby covering your monthly mortgage payments.

Providing adequate cover against possible loss is the best way for the average home owner to protect against possible loss and sleep easier at night knowing that you have the right insurance cover.