Home Insurance Guide

For Indians, the biggest asset for almost everyone in our home. Not only is it a fruit of hard-earned money, it is also a place that provides you with comfort and a sense of security. Therefore, having home insurance is of prime importance to keep it secure.

Insurance companies offer different types of home insurance plans, such as landlords’ insurance, tenants’ insurance, content insurance, structure insurance, etc. A standard plan under home insurance will provide cover for loss and damage caused to your home due to theft, fire accident, allied perils and burglary.

Benefits of Home Insurance

When you purchase a home insurance policy, you get coverage for your home against a number of perils. Some other benefits are:-

  • Protection against liabilities

A home insurance policy will provide liability cover which protects you against personal injuries, property damage to guests and other third parties, which might be incurred while they are residing in your house. The policy will also cover against any loss or damage caused to third parties by you or your family members (residing in the insured house). This cover is among the most important as it provides protection to you from possible legal entanglements.

  • Provides coverage against Natural and Man-made Calamities

A comprehensive home insurance policy will cover your home against loss or damages caused by natural calamities like floods, storms, earthquakes, etc. The policy will also provide cover against man-made hazards. This includes acts such as vandalism, thefts, strikes, riots, etc. It will also help you recover financial loss suffered and help you rebuild your home.

  • Coverage of Temporary Living Expenses

The policy will provide expenses incurred on temporary accommodation while your house is being rebuild/renovated. For example, if your house suffers serious damage, making it unsuitable for living until it is either rebuilt or renovated and you have to rent another house or apartment until the said repairs are done. In such cases, the policy will provide cover for expenses incurred in rent. There will be a limit set as per the policy purchased by you.

Things to Know About Home Insurance

Natural calamities can cause sustainable damages to the property, but if you are prudent, you can easily avoid such situations. To make sure that your priced possessions are protected from such unexpected damages, home insurance is essential. Moreover, you can purchase home insurance online as well as offline. To help you buy the best home insurance policy, here are 5 things you must know: –

Building and Contents

There are two types of insurance policies that you avail; basic fire insurance policy and householder’s package policy. The basic fire insurance policy protects the structure of your house from fire and other perils including riot, lightening, storm, and flood. A few policies may also include earthquake and landslide within the scope of coverage. Householder’s package policy, on the other hand, covers the contents of the house along with the building structure. You can easily get additional cover against acts of terrorism too. Those living in rented accommodations can purchase standalone insurance for the contents. For items that you carry along while traveling, like camera, laptops, and jewelry, one can opt for an additional away-from-home cover to protect them from loss or damage outside the house.

Market Value

The sum assured under the insurance policy will be decided in two different ways: it will be based on the cost of items insured and based on the cost of reinstatement. When the sum assured is decided on the basis of cost of items, the cover will get reduced with time, as goods will get depreciated. Generally, the buildings get depreciated at the rate of 2% annually for a period of 50 years. Although this cover may be cheaper, it might not be sufficient enough to replace the items insured under the policy. A better option here would be to get insured at the cost of reinstatement; the cost it will take to replace the items with comparable items.  This amount is typically paid only after the replacement has been made.

Deductibles

A simple way to reduce premium for the house insurance policy is by accepting a higher deductible. Please keep in mind that higher the deductible, higher will be the out-of-pocket expenses. If you do choose to have some deductible, make sure that it is an amount which you can comfortably pay at the time of a claim.

Alternative Accommodation Cover

This is something that is typically ignored by most homeowners, but getting a cover for alternative accommodation is a must. This is especially true for reinstatement, as the claim money will only be released after the building structure has been rebuilt/refurbished, which can take significant time.

Re-evaluate the sum insured

To make sure that your house is neither under nor over insured, it is advisable that you re-evaluate the cover needed every 5 years. This is important because the costs of building and the contents inside will change with inflation. At the time of a claim, if you find out that the house was under-insured, the money you will receive will be in reduced proportion. On the other hand, over-insurance leads to unnecessarily high premium on the insurance policy.

We spend a sizeable sum on buying our dream house, taking a long-term liability in the process to create an asset of our own, but most of us fail to get an insurance cover for this expensive asset. Investing a little amount year can help you safeguard your house from a number of perils, and is certainly a prudent decision to take.