Home insurance: Everything you want to know

[ecis2016.org] Here is your guide to understand each, and every aspect of home insurance policy in India.

The Coronavirus pandemic has exposed the vulnerabilities associated with movable assets while emphasizing the importance of immovable assets like land and property. Although your homes are secured to deal with any adverse situation, they still need a cover that protects you in case something bad happened to the asset. Here comes the importance of home insurance.

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What is home insurance?

There are various types of insurance policies available in the market presently that promise you protection from untoward situations. An insurance cover, which promises safety to your house and property against adverse circumstances, is known as home insurance. Apart from homeowners, tenants can also buy home insurance policies to protect the house and its premises from any mishappening.

Here, it is important to mention that home insurance and home loan insurance are two different insurance products, they serve different purpose, and one should not be confused with other. To have a better understanding about these two products and their differences, read our guide on home insurance versus home loan insurance.

Losses covered under home insurance

Home insurances policies in India offer home protection from various untoward situations including nature-induced disasters like cyclone, storms, lightening, earthquakes, flood, land-sliding, tsunamis, avalanches, man-made disasters like fire, terrorist attacks, burglary, theft, riots, etc. The property insurance policy will offer a cover against these disasters through reimbursements and help in rebuilding your property. Further, home insurance policies are of various types, and they generally offer specific covers. In case you want to have protection against a group of disasters, you will have to buy a customised property insurance policy. To have a better understanding of this, we will have to find the popular home insurance policies in India, which we will discuss in the subsequent section of this article.

Losses not covered under home insurance

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There are several types of losses to your property, which your home insurance policy does not cover. You will have to be extremely mindful of these losses. Firstly, a home insurance policy covers only the building cost of your home. This means it would not reimburse you the entire value of your property that includes the cost of the land. The property insurance cover will also not reimburse you the organic depreciation in the value of the property. Though home insurance policies offer reliefs in case of disasters caused by fire, they would refuse your claim in case the fire was caused by an over-running of an electronic equipment. Insurance companies also don’t offer cover in case your property is damaged due to an ongoing war between two countries.

Some of the losses to your property that are not covered in home insurance policies are listed below:

1. Damages due to natural wear and tear
2. Damages to undeclared items
3. Damages caused by pets
4. Damages caused by running businesses from business activities
5. Damages due to war, nuclear attacks, invasion, acts of foreign enemies
6. Damages due to wrongful usage of electric equipment
7. Loss of cash, antiques, and collectibles during theft and robbery
8. Damages to an under-construction property
9. Damages to a property that remains unoccupied
10. Wilful destruction of property

Types of home insurance policies

There are about eight types of package policies for homeowners and shopkeepers in the market presently. Some of them are mentioned below.

• Standard Fire and Specials Perils Policy
• Home Structure Insurance
• Public Liability Coverage
• Personal Accident
• Thefts and Burglary Insurance
• Contents Insurance
• Tenants Insurance
• Landlord’s Insurance

Home insurance policy premium

The cost of buying home insurance is rising with tremendous rise in instances of natural calamities. The premium for your home insurance policy will differ depending on the insurance cover you apply for. Typically, insurance companies reimburse the sum assumed under the policy contract, total amount the company arrives at after factoring in the value of the asset based on key determinants.

These include the exact location of the area, the area in which the property is spread, the quality of the materials used in construction and amenities.

Key things to remember while buying home insurance

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*Seek protection keeping in view the topographical challenges of the location. A property close to the sea invariably requires cover against cyclones and tsunamis. Similarly, a property located in an earthquake zone will require a cover against it.

*Read the policy documents thoroughly. Insurance companies would use any of these clauses to either complexly deny you relief at the time of need or lower the benefit, no matter how sweet their branding pitch seems. You should be completely aware of the product.

*In case your house has been subjected to any calamity, inform the home insurance company without wasting time.

*Declare a list of all items in your home at the time of buying the policy. The value of items you forget to mention in the home insurance policy will not be reimbursed.

*Only insure expensive items and the things whose replacement might be a problem for you. Don’t extend the home insurance coverage needlessly as this would amount to higher premium payments.

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