What you should know about the household insurance system

To protect your properties from damage or theft, you need to take out a household insurance. For the system the reason for the damage or the loss is not essential, although there are always criteria which free the insurance from its payments. Criteria may be improper use, not locking up the things sufficiently which causes “seduction” of theft or failing to pay the insurance premium. These and several other reasons can cause a non-payment of your insurance, but usually you know about these criteria when signing the contract. If you break the contract and therefore the insurance refuses paying and at the same time helping in the worst case, terrible consequences can follow, just thinking of fires, natural disasters or robbery. So it is important and recommended to know and to abide by the conditions of the insurance agreement to be protected in case of damage.
There are different household insurance systems in Europe and the USA, but the leading thought is the same. You pay a monthly fee to the insurer, which depends on the worth of your belongings and on the risk you want to take. If you prefer the safe way, then you have to pay a higher amount. Taking just the base version of the insurance and paying a little amount bears the risk of losing money for the insured person. Everybody has to rate this risk on his own.

The insurance benefits in Germany

In Germany the household insurance system offers up to three different base versions which can be extended with additional packages, adapted to your individual needs. Overall, the German insurance system includes fewer benefits than the American system. All parts of the household, for example the couch, the television and all other worthy things and furniture can be insured. You have the choice between insuring the worth of your household belongings in detail or taking blanket insurance. The second variant is the most common one in Germany, only the people who have expensive and unique furniture and properties are fixing the worth to prevent being underinsured in the worst case because the general version assumes a medium household value. The second variant has another drawback because this blanket insurance includes a blanket worth per square meter and there can be a problem if you have a very small flat but comparatively worthy furniture because then you are in the risk of being underinsured. So it is advisable to choose your insurance package carefully and find a good balance between the monthly premium and an adequate protection.

The seven types of US household insurance

As already mentioned, the household insurance protects the properties of the insured person from incidents like thievery, damage, loss and also natural disasters. In the USA the risk of natural disasters is even higher than in Germany, therefore insurance is very important. For this reason, the American system provides a higher level of protection than the German system does, which is more than surprising if you look at the insurance system in total, just mentioning the health insurance. The higher level of protection gets clear if you take in account that the US system includes every type of property, not only the belongings in the household. The German system includes only household, meaning the things that you have in your house or in your flat.
Looking at the American household insurance we see that it is divided in HO1-HO6 and HO8; HO stands for Homeowners insurance. These seven types represent seven different scopes of benefits in turn for seven different groups of people with different requirements. With these seven types, the American system provides insurance packages that are suited to the needs of different population groups. HO1 for example is the very base version which includes only protection against thunderstorm and fire damages. HO3 is targeted at all house owners because it includes all safeguarding which can be important if you want to protect a house. Furthermore HO4 is for tenants’ requirements. The other types aim at other groups of people with their special requirements and so the choices are better in the US system.