Buying and owning a home of your own is an aspiration that all of us cherish. Buying a home is one of the most important financial decisions we make. But what about insuring it? Home insurance is not the first cover on the most people’s list but there is no denying that it is an important cover to have in case things go wrong. House insurance is the best way to mitigate any damage caused to your house due to man-made or natural calamities.
What is Home Insurance?
Home insurance policy is a form of insurance that can be tailored to protect an individual’s home against damages to the house itself or to the possessions in their home. You can purchase home insurance only for the structure/building of your home, or the contents inside the home, or both.
In case you have opted for coverage of the structure only, then the insurer will only bear the cost of replacing or reinstating or repairing the structure in case of a calamity. If you opt for a cover for contents and belongings, the insurer will bear costs if there is damage to household contents, appliances and electronics.
Why get a Home Insurance Policy?
You need home insurance for the same reason that you need insurance for yourself or for your car; it is precious. Any damage to it can have drastic emotional and financial implications. Having a home insurance policy will at least take care of the latter. Here are a few reasons why you need to have a home insurance policy:-
- Natural Disasters
A robust home insurance policy will protect your house from all sorts of natural disasters or “Acts of God,” such as earthquakes, typhoons, cyclones, floods, landslides, etc.
- Man Made Risks
Despite the use of latest safety gadgets and increased security in the housing complexes, the risk of manmade threats such as thefts, robberies, terrorism, riots, etc. are very real. While even the best home insurance coverage may or may not offer default protection against all such events, you can always ask for the protection as an add-on.
- You will need Cover Regardless of where you Live
Even though you might be renting flat or an apartment, or might be living in a housing society, you will still need house insurance. For example, if you are living in a housing society that includes insurance in your leasing contract, you may not have protection against “Acts of God”, and hence, will need home insurance policy to get cover against the natural calamities, not to mention if the geographical area you live in is prone to robberies, it might be time to get this insurance.
- Everything is Valuable
An insurance for your house will usually cover two things; the structure of the house and the contents within. Most of us have items that hold sentimental or artistic value, such as inherited jewellery or artwork. To make sure that what holds meaning to you is insured, read the insurance policy documents carefully, and consider opting for some add-on benefits.
- Home insurance also provides Third Party Cover
Yes, this may sound a bit surprising but many insurance providers provide cover for third party that is staying in your home in the form of Public Liability Benefit. There is a chance that an unfortunate event may occur while a guest is staying your home, and to protect you from compensation and legal expenses that may arise due damage or bodily injury to third parties, a home insurance policy is vital. In addition, there might some other structures such as a garage or a room for the domestic help. With the right add-on cover, even these structures can be covered under the insurance.
- Helps with Temporary Relocation
There is always a chance that a natural disaster might force you to find an alternate place to live while your current home is being reconstructed. For such cases, many insurance providers give cover in the form of covering the additional rent up to a certain specified amount, which can get you a comfortable place to live in while your home is rebuilt.
Factors that affect Premium on a Home Insurance Policy
Here are some of the factors that affect premium on house insurance:-
The place where your house is located affects the premium on a house insurance policy. For example, if your home is located in a region that is in close proximity to a flood-prone water body or a river, or you live in a neighbourhood where theft, robberies and such activities are rampant, then chances are that you will be paying more premium on your policy.
- Feature of the House
Factors like the structure of the house, age, type of roofing, wiring and presence of a garage or another out-building can affect the premium of the house insurance. The older the house is, the more you would need to pay to insure it. The materials your house is made of can also affect your premium amount.
- Installation of Security Devices
Installation of protective devices in your home like smoke detectors, fire alarms, burglars systems, etc. can also help bring the premium amount down as these devices contribute to the safety of the house.
Everyone needs to purchase a home insurance policy to protect their personal property and home. Even those who live in a rented house need insurance cover to protect their furniture and other personal property. Remember, the better your insurance coverage is, the less you have to pay out of your own pocket in case of an unfortunate event.