Buying home insurance? Here are some tips

Most of us are aware of insurance in some form or other. These are the all too common life insurance, car insurance and the like. However, many consumers are not aware of all the details about the insurance for one of the most important asset that you have, your home.

So what is home insurance? Home insurance is not unlike life insurance. In a life insurance scheme, your nominees or dependents are offered an amount in case of your untimely death, due to natural causes or otherwise.

Similarly, home insurance can cover losses to the structure and contents of your home from any natural or man-made calamity.

It protects your house from unwanted, unforeseen causes that can damage it such as fire or lightning and smoke, storms of all kinds, explosions, riots or civil commotion, burglary, breakage of glass, vandalism, hooliganism and vindictive mischief.

The only difference between the two is the value of the object involved. Of course, your life is very precious but so is your house which you have acquired after much investment, hard work and planning.

A valid question is how are the value of the house and its contents assessed? The value of your house is assessed as per the area of your home multiplied by the rate of construction per sq feet, as on the date of taking the policy.

For example, if your home is of 1,000 sq feet and the construction rate per sq feet is Rs 800, then the sum insured for your home's building structure is Rs 800,000.

On the other hand, the contents are assessed on the market value of the items. This means that if there were a loss, the claim would be paid on the value of purchasing a similar new item, less depreciation for the usage.

So you ask, how does insurance help? In the event of some burglary, fire or any of the reasons mentioned above, an individual can claim the amount he or she has lost due to the reasons mentioned earlier.

Home insurance insures the applicant's house as well as everything of value inside it including jewellery, television and other electronic items in the house.

But then again, what are the benefits of obtaining home insurance? Taking home insurance has many benefits.

• The house is safeguarded against a variety of unwanted incidents.
• The cost of the premium that you have to pay is very low often less than 1%.
• The insurance covers a host of segments -- from terrorist attacks to breakdown of water tanks.
• In case the family is forced to shift to an alternative accommodation because of an insured peril, the cost of the additional rent will be taken care of by the insurance company.

Normally, there are many things in fine print when it comes to insurance companies. So what are the exclusions of a home insurance policy?

The company is not liable to make payment for:

• Any loss or damage by the insured and/or insured person's domestic staff's direct or indirect involvement in an attempted burglary
• Any loss or damage on account of loss of livestock, motor vehicles, pedal cycles, money, securities for money, stamp, bullion, deeds, bonds, bills of exchange, promissory notes, stock or share certificates, business books, manuscripts, documents of any kinds, ATM debit or credit cards, unless previously specifically declared to the company.
• Any loss or damage to any property that is illegally acquired, kept, stored which is subject to forfeiture.
• Any loss or damage occurring while the insured person's home is unoccupied, for a period of more than 30 days consecutively and if the insured failed to inform the company about the same.

A natural query in your mind would be of any points to be considered before obtaining a home insurance policy.

• You should find out whether the coverage offered by the home insurance company is automatically adjusted as a protection against inflation otherwise he/she should review the policy.
• If new property acquisitions made by you are not covered by the home insurance company then you should buy extended coverage to insure those items.
• You should ask for optional coverage if dwelling in areas frequently impacted by floods and/or earthquakes.
• A thorough and detailed comparison of the quotes and coverage of every major home insurance company usually leads you to a cheap home insurance policy with smaller premiums.
• Before subscribing to any home insurance policy, you should essentially be assured of the financial standing of the home insurance company in question.

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