Property Protection: Home Insurance

Due to its worth, a house or residence is the first place that comes to most people’s minds when considering the value of their assets and possessions. Although in theory, the importance of protecting, maintaining and repairing a home in case of damage is necessary, it is often neglected to be put into practice.

According to the most recent National Survey of Financial Inclusion (ENIF, 2021), only 21 percent of the Mexican adult population (18 to 70 years old) has some type of insurance, with life insurance, vehicular insurance and medical insurance being the most common. In fact, only 26 percent of households have home insurance and only 6.5 percent of households are insured without being linked to a mortgage loan.

Characteristics and factors that must be considered when purchasing this type of insurance.

To learn about the importance of insuring a home against different mishaps, Vallarta Real Estate Guide spoke with insurance broker, Selene López, who clarified some key points about the different kinds of policies, types of coverage and their characteristics, as well as the most frequent risks and the misconceptions that exist around them.

“Your property is your most valuable investment. Both the structure and its contents have great value and securing them is the way to protect their continuity, as well as the safety of your home and family. When you are taking out a policy for your home, you must consider two things: the value of the assets you have—both the property and its contents—and the risks you face,” she explains.

“Without insurance, you could be left unprotected against natural catastrophes that we may be prone to, such as an earthquake or a hurricane, which can leave you without the assets for which you have worked so hard.” However, apart from extreme or unusual cases, there are more everyday risks in the Vallarta · Nayarit area, such as the rainy season. “During the months of May through November, rain and water damage is frequent. Although the impact of water alone can affect a structure, one must also consider leaks, floods and winds that can blow parts of the roof or break glass during storms, as well as lightning that can cause fires and/or short circuits.”

Another common danger is theft. “Although it may not damage your property, it can leave you without many of your appliances and other valuables. Normally, the goods that are insured inside a house are furniture, electronic and mobile equipment, as well as high-value pieces, such as jewelry and works of art.”

Basic Coverage

Normally, home insurance policies include the following items: the building and its contents, theft, electronics and appliances, broken machinery and glass, and, of course, civil liability. Many policies also include premium or special coverage, like pet assistance.

The Difference Between Insurance for Houses and Condos

When purchasing a home insurance, you should check if the policy will be for a single family house or a condo. “If it’s a house, you have to cover the entire structure—the walls and roof—as well as the interior contents. However, if you live in a condominium, where you are paying for maintenance, ideally the building insurance will already be included, so you should only need to insure the contents. To make sure, it is advisable to ask the administrator to show you the master policy of the building and confirm that it is valid”.

Owner, Landlord and Tenant: Who Should Insure the Home?

There are some variables between owning and renting: “If you are the owner of the residence and you live there, you must consider all the elements and risks, since any damage to the house and the interior will affect you directly. One recommendation is to look for a policy that offers coverage for extra expenses, like paying for a hotel or to rent another house if you had to leave your home due to some mishap. And do not forget civil liability in case you are responsible for any damage to a neighbor.

“If you are an owner, but in the form of a landlord, you will be interested in a policy that covers the house and the structure, but not the contents that belong to the tenant. In addition, civil liability coverage should be included in case something happens within the property, since, even if you are renting it, you are still considered responsible as the owner. In addition, when you are renting, it is important that the policy covers the loss of income, because if there is an accident, it is possible that your tenant may vacate the property before the end of the rental contract.

“Conversely, if you are a tenant, you should be interested in insuring your belongings and any equipment that you are going to bring into the home. But let’s imagine that if while using your laptop you cause a short circuit and damage the property. For cases like that, it is recommended to include a tenant civil liability clause that covers the construction value of the house (something that is normally included in lease contracts)”, explains López.

Myths

There are misconceptions about the usefulness of home insurance, as well as erroneous speculation about its price. However, López assures that the reality is different.

“In Mexico, the culture of insurance is not yet integrated into society. Ask someone, regardless of their socioeconomic status, if they have their home insured and they will say no because ‘nothing is going to happen’. In Europe, the United States and Canada, the culture of prevention is deeply rooted. In our country there is the idea that, if something happens, ‘we will see how we fix it’. For foreigners, buying a house and taking out insurance are two concepts that go hand-in-hand. It is a matter of priorities. Many think that it is cost prohibitive and don’t purchase it, but the reality is that its cost is slightly higher than that of car insurance and if you do the math, for a similar amount, you are insuring an asset that is immensely more valuable than a vehicle.”

Finally, Selene López clarifies that “the misconception that having an insurance policy is useless because ‘I’m not going to use it’, ‘the insurers don’t pay’ or ‘the small print’… whether it’s for a small incident or for something serious, the policy is going to be used. It’s important that people see it as something that is protecting their most valuable assets and that just by adding a little bit to their annual budget, they don’t risk having everything disappear overnight.”