Going for home insurance? Here are some tips to pick one that’s ideal for you
A home is undoubtedly the most prized possession of us Indians. It is our biggest asset by far, and is the place we go to at the end of the day to find peace, comfort, security and relaxation. But like all other possessions in life, this asset is also vulnerable to outside elements.
There is barely a day that goes by when we hear of some natural disaster on the news channel. India has had its share of disasters that comprise of floods, earthquakes and cyclones. The increase in these natural disasters should make us think about what would happen if we were afflicted with them. Or more importantly, are we ready to brave the situation financially?
Home insurance provides the necessary cover and ensures that our most prized asset is protected, even in the face of an enormous calamity such as a flood or an earthquake. So, if you haven’t insured your house yet, it is recommended that you do. And, before you go, here are some tips that will help you get the best deal.
Type of Cover
The first thing that you need to decide is which type of coverage to buy. There are basically two types of home insurance policies in the market:
- Structure Cover – This policy covers only the structure of the home. Hence the compensation paid under this policy will only cover damage caused to the property / structure in the event of a natural or a man-made calamity.
- Contents Cover – This plan compensates the insured for the possessions inside the home. So, if any of them are damaged or burgled then the insurance company will compensate you for the loss.
A customer can also get the best of both worlds and go for both – structure and content cover. It will give the most comprehensive protection possible, and ensure that everything of value is taken care of.
The Depreciation Factor
After the type of cover is decided, the next step is to decide on how you’ll get the sum assured. There are usually two ways.
Depreciation Cost Basis
If you decide to go with this, the sum is decided based on the cost of the items. That means the cost of cover is reduced with time, taking depreciation into account. Normally, the value of the building is depreciated at 2% annually for a maximum period of 50 years.
Reinstatement Basis
This will be the costlier option but is also the recommended one. It calculates the cost what will be incurred to replace the item, with that of something having comparable quality. It, thus, negates the effect of depreciation, but the sum is paid only after the replacement has been made.
Deductible Lowers Premium
If low premiums is what you’re looking for, then a sure-fire way to get them is by opting for a higher deductible. Though a higher deductible will lower the premium, it will also result in higher expense at the time of claim. Therefore, it must be taken care that the deductible is low enough to be comfortably settled at the time of claim.
The Combo Offer
More discounts can be had if multiple products are taken from the same insurer. For example, if a customer takes health insurance along with home insurance from the same company, then they usually reduce the overall premium payable, check with your insurer. Additionally, adding reinforcements to strengthen and increase the security of your house can also lead to a massive cut in premiums.
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