Home Insurance

Moving from a rented home to own home is  truly a wonderful and satisfying milestone in an individuals life. We plan our finances to buy our dream home but most of us don’t take possible measures to protect it. If locking up our home could have guaranteed its safety then the concept of Home Insurance wouldn’t have come that far. There are several  factors which are beyond our control. Buying Home insurance policy is a crucial step towards securing our home. Lets look at the importance of Home Insurance.

  • Home Insurance provides coverAgainst Natural/Man-Made Disasters. With increasing threat of Global warming, one cannot completely rule out the occurance of natural disasters such as floods, cyclones and earthquakes etc which often cause extensive damage to life and property. A home insurance policy comes handy under such circumstances. It will provide compensation for the loss/damage caused to the home due to such causes. Not only natural disasters, a home insurance policy also provides coverage against damages caused due to manmade hazards such as fire, theft, vandalism etc.
  •  Other good feature of Home Insurance is that it provides Compensation for Temporary Living Expenses. That means, in case your home is deemed inhabitable due to severe damage, a home insurance policy will provide compensation for your temporary living expenses until your home is repaired or rebuilt.
  • In addition to providing compensation for Damage/Loss of Assets, a home insurance policy also provides coverage against damages caused to assets like clothes, ornaments, electronic appliances, furniture etc.
  • Another salent feature of Home Insurance policy is that it provides Protection Against Liability. That means, a home insurance policy provides coverage against any liability arising out of accidental damage caused by you to a third party member within the confines of your property.

Depending upon our requirement, we can go for either Building/Structure Insurance that covers damage caused to the home structure as well as outdoor structures such as garages, and sheds Or we can go for home Contents Insurance that covers damage/loss of our belongings such as furniture, clothes etc.

To go for Buliding/Structure Home Insurance, we should be the owner of the property but Home Contents Insurance can be taken even if we live in a rented space. 
Home Insurance Valuation

It is important to understand the home valuation method before buying a Home Insurance. Under home insurance, compensation is given for damage to the home and property. The amount of claim paid in case of damage, is dependent upon the valuation of  home and assets. There are two valuation methods available in the market to choose from while buying a Home Insurance.
 
First one is Reinstatement Value. It means that if home is insured under this evaluation method then the cost of construction can be recovered to reinstate the home. The construction cost includes both material cost as well as labour cost.
 
Second one is Indemnity Value. It means that if home is insured under this evaluation method then claim can be made to recover the sum insured along with the total premiums paid in case of loss and damage to the property. The depreciation based on the age of the property will be deducted from the claim amount under this method.
 
Exclusions Under a Home Insurance Policy: Like all insurance policies, home insurance also has certain exclusions. However, this can vary from company to company. 

  • Damage or loss caused due to nuclear activity/radiation
  • Civil war or insurgence
  • Military attack
  • Minor damages caused due to termite infestation, cracks on the wall etc.
  • Intentional damage 
  • Act of terrorism