Everything You Need To Know About Home Insurances
March 4, 2017
No place can be as comfortable as one’s home. Home is where you can relish, rejoice, and unwind. In most cases, people put their life’s savings to buy a home. What we rarely realise is that our homes need protection as much as we do – and sometimes, even more.
One of the growing concerns for homeowners is the frequency of natural calamities and unforeseen disasters that bring in destruction and loss to their property. While we can always hope for the best, we must always prepare ourselves for exigency situations. By availing home insurance, one can avoid an enormous financial setback caused by unforeseen mishaps to their properties.
What is home insurance?
In laymen’s terms, home insurance is the type of property insurance that covers private homes. Home insurances are designed to protect a person’s home against any damages to the house or its possessions. A home insurance policy is a term contract, which is fixed for a certain period of time, post which you can renew it. Homeowners pay premiums to the insurance company from time-to-time.
Types of home insurance
Home insurance policies are broadly classified into two: basic fire insurance policy and a comprehensive policy. The basic fire insurance policy will cover your home against fire and similar perils. Some of the mishaps against which you can claim insurance under this policy are lightning, flood, storm, and riots. Sometimes, earthquakes and landslides are covered under this policy, but in many cases, your insurance company might ask you to pay some extra premium to cover you against the same.
On the other hand, a comprehensive policy has more covers than the basic fire insurance policy. This policy can be bifurcated into two. Firstly, the policy covers your home against all the listed perils under the basic fire insurance policy. Additionally, the comprehensive policy also covers for the contents of the house. If you are a homeowner, it is advisable to take the comprehensive policy as a whole. However, if you are a tenant, you can just opt to insure the contents of your house and your landlord can take the basic fire insurance policy.
How is sum insured determined?
Generally, when you buy a property, the price you see can broadly be split into three components – land, building, and locality costs. Your sum insured is only for the building costs. In simple terms, if the market value of your house is 80 lakh of which the cost of your building is 25 lakh, you can insure your home for a maximum of 25 lakh only.
Benefits of home insurance
- You will get a comprehensive coverage not only for your house but also for its contents.
- Your assets are secure irrespective of the unexpected calamities that you might have to face.
- You will have reduced stress level, no matter whether you are planning to live in your home or rent it out.
- Since most insurance companies make timely insurance payouts, rehabilitation, even in cases of substantial damages, can be done quickly.
- When you pick the right insurance, at a very affordable premium, you will be able to protect your home as well as its contents efficiently.
Exclusions in Home Insurance
The following losses would not be covered under your home insurance policy.
- Damage caused to the home or its contents by wear & tear or depreciation
- Loss of cash due to any mishap
- Damage caused by invasion
- Damage caused by nuclear war or any other kind of wars
- Loss or damage caused to electronic equipment due to over usage
What happens when you sell the house?
When you sell your house, you need to inform your insurance provider about the same and terminate your insurance. You can, however, choose to keep the cover for the contents of your home. The person who purchases your house can take a new insurance policy under his name.
Who should apply?
Home insurance is for everyone who has a home irrespective of whether it is owned or rented. The common myth with home insurance is that only homeowners should take it. However, the truth is both homeowners and tenants can take an insurance policy. While homeowners insure their house, tenants insure the contents of the home they live in.
How to file a claim?
Every insurance company has its own deadline when it comes to insurance claims. Generally, this period varies between 7-15 days. It is advisable to file a claim as soon as possible. While filing the claim, you need to produce a FIR report, a fire brigade report, police investigation report, repair estimates, invoice of owned articles, etc.
We hope you got to know everything that you need to know about home insurances. Have you insured your home? If not, now is the time to do so.