Home is where the heart is. Our homes are a sanctuary to rejoice, feel bountiful happiness and build memories each day. It is also a place where we invest time, money and energy. It is important that you secure your most important asset from any possible kind of natural or man-made damage. This is where a Home Insurance policy comes handy. In times of any natural disasters such as earthquake, flood etc or any other accidental damage such as fire, short circuit, a home insurance policy covers the cost of expenditure towards rebuilding your house.
Also known as the homeowners insurance, this policy comes with a host of benefits like:
- A comprehensive cover encompassing both structure and / or contents of your home
- A relatively low premium rate in comparison to other policies
- Relaxed enjoyment of your asset with a back-up in case of misfortune
- A claim payout that will help re-build your life quickly during distress
What are the types of home insurance?The types of home insurance cover vary across insurance service providers but are broadly categorized as:
House Building Cover: This type of cover provides you reimbursement for any kind of damage caused by fire, lightning, riot, strike, storm, cyclone, earthquakes, floods etc that damages your house from the outside. It pays for rebuilding of your house, damages to any detached structures, helps protects your assets etc.
House Content Cover: This type of cover reimburses you for the personalized items in your home that may be damaged or destroyed. This includes your furniture, clothes, goods and electronics.
Many Insurance companies however, also classify home insurance under the following categories.
- Standard Fire and Special Perils Policy
Aimed to provide coverage against certain special perils and fire outbreak, this policy can be bought either by house owners (for their own house) and also by tenants living in a rented house. The sum insured, for this policy, is calculated as Building - Cost of reconstruction (exclusive of land value).
A Standard Fire and Special Perils policy covers the following causes -
- Natural calamities like lightning, fire, volcanic eruptions, bush fire, forest fire, earthquakes, storms, floods.
- Damages caused due to explosion/implosion, man-made anti-social activities like strikes, riots, damage caused with malicious intent
- Damage caused by direct contact of rail/road, vehicle. Damage caused due to the insured house, with your own vehicle, is not included in this cover.
- Damage caused due to bursting or/and overflowing of water tanks, pipes and apparatus
- Subsidence including rock slide and landslide
- Missile testing operations
- Damage caused due to leakage from automatic sprinkler installations
- Home Structure/Building Insurance
This home insurance cover protects the structure of your house from any kind of dangers and risks. Further, it also protects any permanent changes within the house such as kitchen and bathroom fittings, or the ceiling/roof of the insured house. It also extends to things like garages, outdoor rooms/house or sheds.
- Public Liability Coverage
This coverage provides coverage to guests or third party if they suffer damage caused to them or their property inside the insured's home.
- Personal Accident
Covering you and your family, this compensation is provided when there is permanent disablement or death of the insured person due to accidental or physical injury, even if it has happened anywhere else.
- Burglary & Theft
This policy covers you against any occurrence of burglary or theft in the insured house, and any valuable contents that are stolen or damaged.
- Contents Insurance
This home insurance policy protects the goods inside your house from damages and loss owing to theft, fire, flood and other such mishaps. From your documents, portable equipment, to your jewelry, TV, refrigerator, etc. all are covered. This comes in handy, when you have to replace the interiors of house if your house is flooded, or is damaged completely due to fire.
- Tenants' Insurance
For a tenant, it is advisable and best to opt for cover that focuses on protecting your contents. You do not have to bother about the building's insurance till the time you haven't bought your own house.
- Landlords' insurance
For the maintenance and upkeep of the building/apartment/structure of the house, this type of insurance is specifically designed for landlords. It also covers things like loss of rent and public liability.
Who should buy a home insurance cover?You live in a rented accommodation and think you do not require a home insurance because it isn't your own house. Think again. What happens when a fire engulfs the house? You could loose all your valuables. In such a scenario, a home insurance cover comes as a big relief. The insurance takes care of refurbishing your own house. Thus, it doesn't matter whether you are a landlord or tenant, home insurance cover is essential.
What does a Home Insurance Cover?Most home insurance policies will cover damage caused by perils such as:
- theft or vandalism
- impact damage such as destruction caused due to rail or road vehicle or any other road/rail/metro work
- overflowing water tanks/pipe
- leakages from any sprinkler installations
- missile testing operations
There are home insurances that provide cover for articles inside your house such as:
- household appliances and electronics
- household content such as clothes, furniture, crockery
While buying a home insurance cover, it is important to clarify what covers each insurance company offers and what aspects are excluded from each policy. For example: Some insurance companies may provide two different home insurance covers one as a shield against any damage caused to the outer surface of the home and other for the contents inside the house. On the other hand, it may be an additional feature that you have to opt for while buying a general home insurance cover.
What does a home insurance NOT cover
There are a few hazards which your home insurance policy may not cover. They are:
- Sewer backups
- Termites infestation
- Nuclear plant accidents
- Excessive pressure or over running of any electronic equipment
What do you need to check for in a home insurance?
Like other insurance plans, a home insurance cover too varies across insurance service providers. Here are a few pointers that you must keep in mind for making an informed choice regarding a home insurance:
- Claim settlement ratio: An insurance service provider that takes lesser turnaround time in settling your insurance claim should definitely be your first choice for buying a home insurance. The whole purpose of buying insurance turns futile if your service provider is not fast enough in disbursing the claims. Check and compare the track record of the particular company that you intend to buy from before you finally end up purchasing one.
- Evaluation of risks and cost: You cannot avoid any calamity or disaster that is not in your hand from affecting your house. Thus, evaluating the risks that your home may have to incur, before buying a home insurance will be a good idea. For example: If your home is located in an area that is prone to earthquakes, it is good to have an insurance that would cover such risks too. Further, keep in mind to check the premium for the insurance cover. At the end of the day, it should not burn a hole in your pocket. You can compare and choose the insurance basis premium quotes available on the Policynation website.
- Customer friendly: While buying insurance, apart from the cover and other aspects, it also important to note whether the insurance service provider has a competent customer service that would be ready to answer your queries at any given point of time.
- Sum Insured: The value of your house has three components: land, building and locality costs. A home insurance policy will cover only the cost of your building and not the market value of your house which includes land and locality value. For example, if the market value of your house is Rs 1 crore, of which the building cost is Rs 30 lakh, your policy will insure only Rs 30 lakh. Therefore, it is important to keep this in mind while picking an insurance plan, especially if you are part of a housing community or apartment complex
To ensure that you do not have to pay more than you can afford for refurbishing or rebuilding your home, you can consider taking the following add-on covers along with a home insurance cover to keep worry at bay during unforeseen circumstances:
Following are the types of covers: Terrorism Cover -
It provides protection against any acts of terrorism to your house and the contents therein.Cover for Domestic Appliances-
It provides protection against any damage due to fire, breakdown or theft etc, to your household items including television, refrigerator, air conditioner, washing machine etc.For Valuables including Jewelry-
This provides extra cover against damages caused to your precious possessions including jewelry, sensitive documents, expensive watches, etc., against any natural or man-made reasons.Earthquake Cover-
It is although an in-built clause in the home insurance policy but sometimes is offered as an add-on cover.
Please note that the covers mentioned above are the more commonly subscribed options. It is advisable to consult your insurance service provider for a complete list of add-on covers
How to claim a home insurance?
Like your other insurance covers, home insurance too has a certain deadline within which you are supposed to inform the concerned insurance provider about your loss. While the duration varies from company to company, the sooner you file the better it is for you. Be it email, sms or phone call, make every move that would make registering the claim faster.
Before you file a claim, ensure registering an FIR and keep the copy of it for submitting to the insurance company. Other indicative documents include the following, however, there might be any other document as desired by the insurance service provider that you may have to submit during claim settlement:
- Fire brigade report
- Police Investigation report
- Invoice of owned articles
- Original invoice of supplier for replacement
- Medical officer's certificate for death or disability
- Estimates of the repair
- Court summons
With increasing premium costs comes increased liability. Fitting a home insurance in the larger scheme of your yearly budget, is an objective that you may want to seriously consider. Here are a few pointers on how you can reduce the premium you pay to insure your house.
- One of the easiest ways to reduce your home insurance premium costs is to compare all available home insurance policies before applying for one. Check the policy inclusions, exclusions and features to know which scheme offers the best value for money.
- Check for discounts offered by your insurer. Many insurance providers in India offer special discounts when you install monitored security devices like smoke detector and burglar alarm.
- Increasing the deductible amount for home insurance also reduces premium costs.
- Make sure that you have sufficient amount of coverage but eliminate all unnecessary add-on covers.
- Different types of home insurance policies are offered depending on if you are a home owner or a tenant, choose your home insurance plan accordingly.