Home Insurance: Jargon Busted part 1

If you've ever tried to read through the terms and conditions of a home insurance policy, only to come away feeling more confused than ever, then this guide is for you. It covers the most common terminology used by insurers.

Accidental Damage Cover is basically what it says; it covers belongings and property for damage caused by accidents. In the case of home insurance, one of the most common is the classic 'foot through the ceiling'. This would be covered under your buildings cover. If you dropped paint on your carpet while decorating you could claim on your contents cover.

Act Of God/War are sometimes excluded on most insurance policies; it means if your property is damaged or destroyed by natural disasters such as hurricanes, earthquakes or bombing, you might not be able to claim. Flood damage is usually covered however.

All risks cover will insure certain belongings when taken out of the home; laptops, jewellery, watches and the like will usually be included in this. Also sometimes called Personal Possessions Cover, it is an optional extra and will not be offered by all insurance companies and standard. Check your policy for details of inclusion.

Arbitration Clause; this scary-sounding term simply means that if you and your insurer cannot agree on a settlement figure, you both need to hire an appraiser. This appraiser will consult a neutral umpire who will decide the amount of the claim.

Buildings cover insures the structure of the property along with any permanent fixings within the premises under your ownership. This includes things like walls, patios, garages, sheds and bathroom fittings.

Contents cover insures everything else; carpets, curtains, furniture, electrical goods, and anything else which is removable from the home. Some policies will also cover items in the garden such as ornaments and patio furniture. Again, check your policy.

Claims Histories are used by an underwriter to assess how much of a risk you may be if given a policy. Generally, insurers prefer to insure those people who aren't likely to actually make a claim; indeed some insurers won't take on anyone who has made a claim previously, no matter how small. Fortunately, there are insurers who will cover customers who have made claims in the past.

Depreciation is taken into account when claiming on a 'new for old' policy. An amount for natural wear and tear is deducted when claiming for items such as clothing and bedding. For example, a suit is expected to have a lifespan of 5 years so, for every year you've owned the suit you need to deduct one-fifth of the price you'd pay today for one of the same quality.

Freezer cover will cover the cost of replacing the contents should your fridge freezer break down. The amount of cover can vary between insurers so check your policy.

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These are just some of the home insurance terms which are commonly misunderstood. Cheap home insurance may not provide you with the level of cover you need. When purchasing house insurance look for the best deal, not just the cheapest price. See part 2 for more terms.

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