Building a home is a dream in India. The average Indian saves and toils for most of his life to make this dream a reality.
Owning a house does not only give you emotional solace, but also serves as a strong financial security for the future.
Thus, being such an important asset, a home needs to be protected. While sophisticated locks, electronic alarms, fire extinguishers are all must have devices to safeguard our home; these may not completely eliminate the risks of security and damage.
For complete protection owners today should definitely look into purchasing a home insurance policy. Home insurance, also commonly called homeowner's insurance, is the type of property insurance that covers private homes.
It is an insurance policy that combines various personal insurance protections as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.
A comprehensive home insurance policy including household articles help us to lower our damage. It covers the following aspects:-
Cover against Fire
Fire can take due to any reason and a small spark can lead to very heavy losses. A comprehensive home insurance policy provides cover against fire. Home insurance covers the structure of your home as well as household articles.
Cover against natural calamities
With global warming and changing environment leading to more frequent natural disasters, the need for home insurance is greater now.
Natural calamities like earthquake and cyclones can ruin our homes leaving us homeless for number of years.
But this damage can be controlled by taking home insurance policy as a general home insurance policy covers risk from calamities like earthquake, floods and tycoons, lightning, hurricanes etc.
Cover against manmade activities
Man-made activities pose a bigger threat now than they used too few decades back. Risks from terrorism activity, burglary and theft leave us empty handed which can prove very fatal.
Terrorism is the biggest threat as it can cause wide scale damage to property while burglary and theft can leave any locks stranded due to very weak and inappropriate security infrastructure.
Ideally, every homeowner should buy home insurance but we see that its demand is mostly restricted to the metros.
The cost of securing your home and its contents is as low as Rs 5 per day for a sum assured of Rs 9 lakhs. Yet, unfortunately, home insurance policies are the least priority for most and is hardly ever a part of one's financial planning.
While purchasing home insurance, keep in mind that insurance policies cover your home for its reconstruction cost and not for its market value.
The idea is to get a cover which will be sufficient to rebuild your house in case any harm comes to the structure.
Another important factor on which the reinstatement value depends is where the property is located. Premium rates are standard but the actual sum assured may differ from location to location due to difference in the cost of construction.
If you live in a housing society with insurance cover or have a rented accommodation, you will not need a policy to protect the structure.
However, they must consider buying a home content insurance cover. This generally includes valuables such as jewellery, electronic equipments, furniture etc.
The sum assured for these assets is calculated on the basis of their market valuation. This means, if there is a loss, the claim will be paid on the value of purchasing a similar new item.
However, the cost of replacing the lost item will be settled after deducting appropriate depreciation on the basis of the age of the item.
Important items like cash, stocks or bonds, antique items, collections and other property documents are never insured by any insurance company.
Also, do not expect to get the claim payment in case the damage or loss is caused by your domestic help. None of the companies cover losses where the insured's domestic staff is involved, directly or indirectly.
Moreover, if you are working out of your home, the policy won't cover the section being used for commercial purposes and you would need a merchant's policy to insure it.
The best way to compare and shop for a home insurance cover is to ascertain the types and amounts of coverage you want and then see what different insurers have to offer.
Opting for a long-term policy of, say, 10 years not only saves you from the hassle of renewing the policy again and again but can get you a discount on the premium, sometimes as high as 50%.
Ideally, one can go for a long-tenure cover and avail of discounts.
Author: Yashish Dahiya, CEO & co-founder, Policybazaar.com