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Insurance Article

Top Reasons to Buy Home Insurance

April 11 2013

You should buy a plan that offers you cover for the natural and man-made calamities your home is vulnerable to.

A typical home insurance is an important part of any home owner’s life in India. Buying a property insurance plan is a kind of assurance that your home and its insides are safe even if there is an emergency. These plans are designed in a fashion to offer adequate protection to homeowners against various unforeseen circumstances including flood, fire, tremor, and quake. In the event of damage or loss incurred from perils mentioned in the policy document, the home insurance company will compensate as per the reconstruction cost of the house. The restoration value of a damaged house is usually measured with respect to the area constructed before the damage and the cost of construction. This amount is usually predetermined by the insurance company. You require getting an estimate of rebuilding cost. This should be as per the sum allotted as ‘insured’ under property insurance plan. The insurance corporation will disburse this amount in the event of a loss.

Since the property insurance plan covers the cost for reconstruction, you must know how exactly the sum insured is determined for a solo accommodation in a building. You may also wish to know if you desire to buy a property insurance plan individually or share it with other owners in the building. The claim process may also be confusing. You should know how exactly the insurance company will recompense. Since there is one more claimant in the event of a building damage, you need to know all about the technique of compensation.

When the building is under construction

It is not possible to buy home insurance plan for a solo apartment when it is being constructed because it is a part of a building structure. For a building under construction, it needs to be covered under a plan referred to as the ‘project insurance’. Usually the builder invests in this plan.

The home owner can purchase a cover for any private cottage or a house under construction through a builder. The cover is also valid in a private constructor is recruited to complete the construction project. This plan can be converted into a regular one as soon as the construction work is accomplished.

Before buying a property insurance plan:


There are a few things one must keep in mind when buying a property insurance plan.

Sum Insured

You should know about the adequacy of amount insured before buying an insurance plan. This should be calculated on the basis compensation. Also make sure the amount reflects the accurate value of property. Many buyers tend to decide on the sum insured equivalent to the marketplace value. This is where they go wrong. However, an insurance company will only pay on restoration charge. This amount is variable with charges for construction. Usually, you can take about 10-15 per cent augment in the overall cost of house construction. This may vary from one city to another. You may even check the present date for construction from the municipal corporation. There are many websites online dealing with real estate topic where you can get this information.

Cover Tenure

There are two choices when it comes to deciding on cover tenure for home insurance plan in India. You can choose a yearly cover or a plan that gives multi-year cover. The yearly policy will allow you to revisit adequacy of sum insured each year. If you go for a lasting guiding principle, you can avail a discount that can go as higher as 50 per cent, depending on the terms and conditions of the company and the tenure you go for.

The Benefits of Property Insurance

Knowing about the benefits of property insurance will help you extract maximum profits from the investment made in the long run. There are many important home insurance benefits that one should be familiar with. Some of these are mentioned below:

Investment Protection

This is one of the biggest benefits of home owner insurance plan. With this plan in hand you can rest assured that your insurance plan is protected. You don’t need to worry about anything bad happening to your home or the financial impact of the same. The insurance company will take care of everything.

Affordable Premium

A lot goes into buying a home. Any damage or loss due to a natural or manmade calamity means putting the investment at risk. A home insurance plan will ensure adequate protection at an affordable monthly premium. Property insurance is affordable as compared to various other insurance plans available on the market. Buying a plan that best fits into your requirements and budget plan will help you keep the property safe without adding financial burden to you.

No Stress

Of course, buying a home owner insurance plan will cut down on a lot of stress you may go through due to the loss and damage that may occur without prior notice or warning signs. Having the best home owner insurance policy will help you get the best security for your home. There is absolutely no requirement to deal with stress when you can buy an insurance plan for your home.

The natural calamities covered:

  • Cyclone
  • Lightning
  • Hurricane
  • Storm
  • Flood
  • Fire
  • Typhoon
  • Tempest
  • Rockslide
  • Tornado
  • Landslide
  • Subsidence
  • Bush Fire

Man Made Calamities Covered

  • Robbery
  • Theft
  • Mutiny
  • Strike
  • Loss or destruction caused by missile testing actions
  • Damage caused due to malicious activities
  • Damage from bursting of water tanks
  • Destruction caused by overflow of water tanks Bursting of apparatus and/or pipes
  • Leakage and damage occurring from installation of automatic sprinkler

With so many benefits of buying property insurance plan, it is important that you buy one without delay. This will help you protect the most valuable investment of your life.

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