Home insurance: protect your most valuable asset
Home insurance is intended to protect your building, belongings, and liability toward others in the event of fire, flooding, theft, or other serious damage. On this page, we will learn the differences between building and contents insurance, understand which extensions are worth examining, and see how to compare policies so that you receive suitable coverage without paying for unnecessary protection.
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For most of us, our home is our largest financial asset. A fire, flood, or earthquake can cost hundreds of thousands of shekels (שקלים) — and that is exactly the risk insuranceA contract under which an insurance company undertakes to compensate the insured in the event of damage in exchange for a periodic payment. is intended to cover.
Home insuranceIncludes building insurance (for the structure of the home) and contents insurance (for the property inside the home). is not one closed product. It is a combination of several types of coverage, each protecting a different aspect. Damage to the building itself, theft of valuable property, or an injury to a guest in your home all require different responses. In this section, we will understand what your policy should include and how to avoid paying for unnecessary coverage.
Types of insurance: building and contents
Building insurance: walls and systems
Covers damage to the permanent parts of the home: walls, floors, ceilings, windows, and fixed electrical, air-conditioning, and plumbing systems.
What does it protect against? Fire, explosion, water and flood damage, natural hazards, and earthquakes, sometimes for an additional premiumThe periodic payment made to the insurance company. (פרמיה).
Contents insurance: personal belongings
Covers everything inside the home: furniture, electrical appliances, computers, clothing, and even jewelry.
What does it protect against? Theft, burglary, fire, water and flood damage, and natural hazards.
Important extensions to know
- Third-party liability: One of the most important types of coverage. It protects you if someone is injured in your home, such as a guest who slips, or if a leak from your apartment destroys the ceiling of the neighbor below. The insurance may also cover legal expenses and compensation.
- Employers' liability: Do you employ a cleaner, caregiver, or gardener? This coverage is essential if they are injured while working in your home. It may also cover legal expenses and compensation.
- Alternative accommodation: If the home is damaged so badly that it cannot be lived in, for example after a fire, the insurance may cover the cost of renting temporary accommodation.
Tenants or homeowners: who needs what?
Responsibility is generally divided as follows:
- Homeowners: Responsible for building insurance to protect the property's value.
- Tenants: Responsible for contents insurance to protect their personal belongings.
How is the insurance price determined?
The price of home insurance is affected by several main factors.
Your premium is influenced by the value of the property and the risks surrounding it:
- Rebuilding value: Not the home's market price, but the cost of rebuilding it from the ground up, excluding the land value.
- SecurityA general term for a tradable financial asset (such as a share, bond, or unit in a fund) that represents a right to an asset or to profits. measures: Bars, a security door, and an alarm can reduce the insurance price.
- DeductibleThe initial amount the insured pays out of pocket when making a claim.: As with car insurance, the more you agree to pay when damage occurs, the lower the monthly payment.
How do you buy home insurance correctly?
- Map your needs: Do you need building insurance, contents insurance, or both?
- List valuable items: Photograph jewelry, expensive electrical appliances, and bicycles. This will help you determine the value of the contents.
- Compare offers: Do not buy automatically through the bank when taking a mortgageA long-term loan for purchasing a property, with the property serving as collateral for the bank.. A private offer is often broader and less expensive.
- Read the fine print: Pay attention to exclusions. For example, plumbing damage caused by natural wear and tear is not always covered.
Small differences in policy termsThe legal contract that sets out the insurance terms, coverage, and exclusions. can have a significant effect on the coverage in practice.
The home-insurance calculator: a tool that can save money at the click of a button
Before buying home insurance, it is highly recommended to use the home-insurance calculator provided by Rashut Shuk HaHon, Bituach VeChisachon (רשות שוק ההון, ביטוח וחיסכון; Capital Market, Insurance and Savings Authority).
The calculator lets you compare home-insurance offers from different Israeli insurers in one place. After entering a few basic details about the home and the requested coverage, you can obtain a clear picture of prices at different companies and identify gaps that may amount to thousands of shekels per year.
Remember that the least expensive offer is not always the best. Alongside price, examine the extent of coverage, the deductible, additional coverage, and the service offered by the insurer.
The bottom line
Home insurance is mandatory for homeowners with a mortgage and highly recommended for tenants and property owners. It prevents a single event, such as a fire, from wiping out all the family's capital and provides a financial safety net in the event of serious damage to the home or property.
Frequently asked questions
Is the mortgage's building insurance enough?
Usually not. The bank's insurance covers only the mortgage debt and does not always include third-party liability or the full value of the home for you. It may be worthwhile to upgrade it or buy a private policy.
Should I order an appraisal of my home's contents?
It is highly recommended. Some companies provide the service free of charge when the policy is purchased. An appraiser can prevent underinsurance and document the property for you.
In summary
Home insurance provides peace of mind. Spending a few dozen shekels per month helps ensure that your most important asset is protected and that, even after a catastrophe, you will have somewhere to returnThe profit (or loss) from an investment over a certain period, usually expressed as a percentage of the original amount invested..