Does Your Biggest Investment Have Insurance Cover? All You Need to Know about Home Insurance

December 3, 2021 Mutual Fund

Owning a home is one of the important goals we aspire to achieve in life. Apart from being the biggest investment most of us make, our first house is also an emotional investment. Hence, it is crucial to secure your home against any un/foreseeable losses and damages. Many general insurance companies in India offer a variety of home insurances at affordable premiums. In this article we will discuss the basics of home insurance so you can choose the most suitable one.

What is Home Insurance?

Home insurance, ubiquitously known as homeowners insurance, is a type of property insurance that provides coverage to a private residence. Basically, it covers you financially from physical losses and damages that could happen to your house, furnishings, and other such residential assets.

What kind of losses and damages does a home insurance policy cover?

What a home insurance policy can cover totally depends upon the type of policy you choose. Here is a list of the losses and damages it typically covers:

• Fire

• Lightning and rain

• Riots and strikes

• Aircraft damage

• Missile testing

• Storms, floods, cyclones, and hurricanes

• Earthquake, rockslide, landslide

• Burglary and theft, etc.

What are the types of home insurance policies?

different insurers offer a plethora of home insurance policies. This is why it is advisable to choose the right policy based on your requirements and policy offerings. Here are some common types of home insurance policies offered in India:

1. Standard Fire and Perils Home Insurance:

A standard fire and perils insurance policy is the most common type of home insurances. This is a traditional home insurance cover that insures the home structure as well as contents against fire and allied perils, as mentioned in the policy document. It provides financial coverage against any damages and losses that occurred due to natural fire or allied perils caused by lightning, rain, storms, flood, cyclones, hurricanes, rockslides, landslides, etc.

Apart from the natural calamities, it covers losses and damages occurred due to man-made anti-social activities like strikes, riots, etc., and any kind of accidental loss or damage, such as damage caused by a vehicle, missile testing, overflowing of a water tank, etc., except intentional damage and accident that you might cause with your vehicle.

The standard fire and perils policy can be purchased by an owner or tenant to secure their residence. This traditional home insurance is ideal for the homeowners who reside in the house and want to secure the home structure as well the contents. The coverage and terms and conditions of the standard home insurance policy can vary from insurer to insurer. Hence, before purchasing the policy, it is advisable to compare the policy offerings and premiums to make an informed decision.

2. Structure Home Insurance:

Structure home insurance is typically bought by homeowners as it covers only the structures of the house against natural or man-made calamities. You should remember that this policy does not cover the contents inside the house. It covers you financially for losses and damages to the building, foundation, windows, ceilings, kitchen and bathroom fittings, garages, outdoor sheds, etc. If you have rented your property, focus on providing coverage to only the structures of the house. In such a case, a structure home insurance cover is ideal for you. However, some insurers offer specifically designed Landlords’ Home Insurance Policy, which should also be considered if you are a landlord.

3. Contents Insurance:

Along with the structure of the house, we spend a lot of money on the contents inside the house, such as furniture, types of equipment like freeze, air conditioner, jewellery, etc. Natural or man-made disasters can damage them completely or partially, creating a huge loss. The contents insurance protects such appliances and other contents against any unfortunate loss or damage. However, it does not extend its coverage to the structure of the house. This type of insurance is mainly purchased by tenants as they focus on securing their contents, instead of the structure of the house. Although a content home insurance policy is suitable for tenants, there are home insurance policies designed specifically for tenants which can be bought for a period you reside in it.

4. Burglary and Theft Insurance:

This insurance compensates the insured from any loss or damage incurred due to burglary, robbery or any kind of theft in the insured house. You must buy this plan if you live in an area where such incidents are common as it will compensate you for the loss or damage to any valuable content you have insured under this policy.

What are the benefits of home insurance cover?

1. It financially protects your home structure and its contents from natural or man-made calamities.

2. For some special contents, the insurer can offer replacement of those items, instead of just compensating them with money.

3. The home insurance cover can be availed at an affordable premium.

4. Your home insurance will protect you from property-related lawsuits, depending upon the policy terms and conditions.

5. You get peace of mind when you know your home is financially protected.

What are the things to keep in mind when insuring your home?

While purchasing the home insurance to secure your house is crucial, it is equally important to know the things to take care of when you buy a home insurance cover and the situations under which your claim will not be accepted by the insurer.

1. You cannot claim for the depreciation, i.e. damage caused by wear and tear.

2. If you have intentionally damaged the property, the insurer will not accept your claim.

3. You cannot claim for the cash kept at home, antique items, and collectables.

4. Loss or damage due to war or war-like conditions is considered as policy exemption and hence cannot be insured or claimed for.

5. If your property is unoccupied for a long time (the period depends upon the policy terms and conditions), you cannot claim for the loss.

6. In order to accept your claim, your insurer will require proof of all the insured items. Therefore, it is necessary to keep all the proofs safe. If you lose the insurance documents, you will not be able to claim those items.

7. If the construction is unauthorised, you will not be entitled to claim for any losses. Therefore, making a wise investment is very important.

8. Your land will not be covered under home insurance; another type of insurance policy is available for that.

9. When renewing a policy for extensive coverage, you should ask for a quote of the reconstruction cost from a contractor.

10. Tenants can insure only the contents inside the house by opting for a content home insurance policy or tenants' home insurance policy.

To Conclude:

Whether you live in your own house, or have rented it to tenants, or stay in a rented house, you should buy a home insurance cover to financially protect your home. Before buying the policy, make sure you compare the different types of policies and their features and terms and conditions to make an informed decision. It is also advisable to compare the premiums of different insurers online to get the maximum coverage at an affordable premium.

This article first appeared on PersonalFN here