Hard-work, sweat, money, time and many other things go into building a home of your dream. There are many expenses that come along while building or buying a new home. Among such expenses is home insurance — although home insurance is not an expense, but an investment towards protection of your home and its content.
In India, there are many banks and financial institutions which are helping people in getting their dream home with the help of numerous home loans. Each institution carries its own set of features and benefits to cater to different financial needs of consumers. Moreover, these days many banks and home loan lending companies are asking applicants to have an adequate home insurance policy for their property. Therefore, if you are applying for a home loan, you will be offered a home insurance policy along with it. Many people might think of it as an additional or forceful expense, but it is not.
It acts as a protective cover that not only safeguards the structure of your house but also protects all associated belongings from any damage that occurs because of any man-made or natural causes.
In India, as compared to other countries, home insurance penetration is low despite an increase in home insurance buyers in the last few years. The main reason for such low penetration is the lack of awareness related to home insurance products and queries associated with the same.
Importance of Home Insurance
There is no doubt that India is a country with diverse climatic changes and in the last few years we have seen many happenings like cyclone in Andhra Pradesh, floods in J&K, Uttarakhand and Chennai, earthquake in Nepal and Northeast of India, etc, that caused huge loss to human lives and physical properties.
In such a scenario, it has become important to have adequate cover for assets and home. An effective home insurance plan will definitely help you in reducing the financial stress in case of any mishap. With the help of a strong home insurance policy, you will be able to protect your home against many natural disasters such as earthquakes, typhoons, cyclones, floods, landslides, etc. Home insurance also provides coverage against fire, explosion etc. as the main cover.
Despite the effective safety measures and security equipment, man-made threats which include theft, robbery, terrorism, riots, strikes, etc. are a real risk. Home insurance policies cover such risks as well.
Typically home insurance policies cover:
1. Structure of home – Home insurance policies provide coverage for all expenses related to repair or rebuilding the home if it gets damaged or destroyed by any peril that is covered under the policy. It is important to keep in mind that while buying home insurance, make sure that you are choosing the adequate cover which will be sufficient to rebuild the house.
2. Content/Personal belongings – Belongings such as furniture, clothes, household equipment, and other personal items are covered if they are destroyed by fire, theft, hurricane or any peril that is covered under the policy. Expensive items that include jewelry, art, collectibles, and silverware can also be covered but up to some limit only.
In India, when we talk about home insurance, then it is a complete package policy that carries many sections that offer various covers. A comprehensive insurance plan covers your home against fire, natural perils, riots, malicious damages, burglary, damage to household equipment, and even personal accident.
Moreover, some home insurance packages allow you to file a claim for personal accident and pay compensation for partial or permanent disability that takes place because of an accident.
Premium & Cost
The premium of a home insurance policy usually depends upon the chosen sum insured of structure and content. Normally, the sum insured of the structure of the house completely depends upon multiplying the area of the structure by the cost of creation.
The value of the contents will be determined by its current market value. All benefits, features, inclusions, and exclusions of the policy will completely depend upon the type of home insurance policy you take.
Moreover, the premium will also depend on overall coverage under the policy and various limits chosen under different categories of the policy like burglary, all risk, breakdown, personal accident etc.
Premium also differs based on past claims and location.
It is always beneficial for you to opt for a home loan insurance policy. You must invest in an effective form of home insurance plan today to reap the much-needed benefits later.
(By Naval Goel, CEO and Founder of PolicyX.com)