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Insurance Article

Ideal Home Insurance Cover

August 28 2015
Home Insurance Policy
Home Insurance Policy

Coastal India, 2004: An estimated 157,393 houses were destroyed by the Tsunami that hit Indian towns rendering approximately 730,000 Indians homeless. The total damage was estimated to be around $ 2.56 billion.

 

RESIDENTIAL PROPERTIES have always topped the 'most desirable investments'. Besides having the innate potential to offer extraordinary financial returns, it lends security, stability and peace of mind to any household. Undoubtedly, a home is one of the most valuable assets one can possess.

USome such dangers that pose a threat to your home are:

  • Natural Disasters: Disasters like earthquakes, floods, cyclone, lightening, windstorm, hailstorm, etc. can cause massive damage to life and property. Humans are rendered helpless against the fury of Mother Nature, leading to heavy losses.

  • Fire: Losing your home and belongings to fire can be a traumatic experience. It not only destroys physical property but also leads to losses caused during efforts to control the fire, for example; damage due to water jets or wall collapse.

  • Burglary: Advanced security systems may not always be the best bet. What happens to your valuables if the alarm system fails? Burglary may lead to damage, loss, or destruction of physical property.

  • Vandalism or Malicious Mischief: Causing harm to physical property is a motive of rioters or mischief-makers who create unrest. Places with a history of political and social unrest have a higher chance of such an occurrence.

INVEST IN AN IDEAL HOME INSURANCE POLICY to be financially secured against such dangers. Here are some perks of opting for a home insurance plan:

  • Financial Safeguard: An ideal home insurance policy grants you peace of mind by insuring you against financial losses if your home is damaged. The replacement cost of homes often outweighs the original purchase price by a significant margin, creating a financial burden for your family to shoulder. Home insurance provides financial support to rebuild a house or replace any lost personal property.

  • Timely Recovery: Insurance payouts allow families to go through the rebuilding process as quickly as possible, helping them to move on and to get back to their normal lives. Not only can a quick recovery save money, it can also benefit the families' psychological health, reducing the levels of stress and trauma.

  • Shield against Home Loan Liability:A key benefit of a home insurance plan is that it provides zero liability in case the home owner, who has availed a home loan, meets an untimely demise or is permanent disabled. In such cases, the home loan insurance plan covers the repayment of the debt.

  • Peace of Mind: You cannot put a price tag for this one. Maintaining adequate home insurance cover will help you cut back on the levels of stress when it comes to keeping your home safe.
  • Affordability: Home insurance policies are available at an affordable premium, which is only a fraction of the cover you receive.

VARIOUS TYPES OF COVERAGES provided under a Home Insurance plan are:

Structure Insurance

As the name suggests, this insurance covers the structure of your property from unanticipated events including fire, flood, etc.

  • What it includes: Walls, roofs, foundations, windows, baths and showers, built-in wardrobes, fitted kitchens, garden sheds, gates, etc. Basically anything you wouldn't or couldn't take with you when you moved home can be covered by a structure policy.
  • Who needs it?

The owner of the property, especially those who have availed a home loan need to mandatorily opt for structure insurance.

Contents Insurance

While your walls, roofs, and kitchen may be covered by the structure policy, you will need a Contents Insurance Cover to protect your furniture and other belongings at home against events such as burglary, flood, fire and accidental damage.

• What it includes: Clothes, kitchen appliances, electronic gadgets, furniture, jewellery, paintings, etc. Any article that you would take while shifting your residence should be covered under the Contents Policy.

• Who needs it?
  • Tenant in a rented property
  • Students staying together in a rented accommodation
  • People who own valuable tangibles like jewellery

Contents Insurance Cover can also be extended to include your personal possessions when you are outside the home. This will attract more cost, but could be of great help if your handbag or laptop is stolen.

WHAT SHOULD ONE LOOK FOR in a home insurance plan? How do you weigh the options available before making the right choice?

An ideal home insurance cover is one that protects you from all financial losses should a calamity befall. It plays a vital role in shielding you and your loved ones from the minor and major tribulations that follow such crises. Here are some parameters that will guide you towards the ideal home cover:

  • Consolidated Cover: In case a home owner needs to opt for Structure and Contents Insurance, it is advisable to opt for a consolidated plan which is more economical. Note: A comprehensive plan is ideally one which would safeguard your home as well as your personal belongings.
  • Alternative Accommodation: You may need a temporary accommodation while your house undergoes renovation. A good insurance plan offers your compensation for the rent expenses incurred during a specified period.
  • Terrorism Cover: Depending on the socio-political environment of your city or country, opt for a cover against damages due to acts of terrorism.
  • Exclusions: Look for the exclusions in the insurance policy, to avoid unpleasant surprises. Some important exclusions and exceptions are:
    • Acts of war and nuclear accidents
    • Wilful destruction of property
    • Damage to vehicles
    • Weather-related damage to exposed wood such as fences
    • Theft from construction area
  • Add-on Coverage: There are several add-on covers also known as "riders" to provide additional protection that isn't offered under a standard home insurance policy. These add-ons cover risks associated with floods and earthquakes.

Notes:

  • Sum Insured under Structure Insurance: The sum insured or 'Reinstatement Value' under Structure Insurance is derived from the cost that you would incur to rebuild the house today. It is not the market value of the house but the reconstruction value of your house.
  • Sum Insured under Content Insurance: The sum insured or 'Market Value' for Contents Insurance is calculated by deducting depreciation from the market value of the articles.
  • Vacant House: It is important to note that you may not be able to claim for loss under a home insurance policy in case your house has been unoccupied for a period of 30 days or more.

 Choose Wisely Live Safely!

 

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