Home Insurance

Whenever we talk about insurance, we always talk about life insurance. But have we looked at the other type of insurances available. Insurance is available for almost everything and Home Insurance is one of them. We might say we stay in a society and as per the society laws, it is mandatory to obtain an insurance policy. But do we as a member of the society inquire if we do have insurance? If our maintenance bill goes up we start shouting.

When we take a home loan we buy the insurance, that time we do it just because we have no choice. We take it only because it is mandatory.

We insure our lives and our car, but our biggest asset, our home is usually not insured.

What is home insurance? Home insurance covers losses to the structure and contents of our home due to natural or man-made calamities. Like any insurance, it protects us in the event of unwanted, unforeseen damage to our home caused by fire or lightning or smoke, storms of all kinds, explosions, riots or civil commotion, burglary, breakage of glass, vandalism, hooliganism and vindictive mischief.

Now the question would be what is the value of the house and its contents? The value of the house is usually the area of the house multiplied by the construction cost of the house. The construction cost would be the current construction cost. So what happens in the case of a society, in that case the society insures the building and charges you the insurance cost based on the area of your house. So if your society is doing the insurance, you don’t need to do insurance on the cost of the house. You just have to insure the contents of the house. How are the contents valued? The contents are valued at the current market value of the items. That means it should be valued at replacement cost at current market rate. Confused? What if it is 2 years old? Then it will be valued at current cost of purchasing the same item less depreciation for usage.

So how does home insurance help? In case of loss, you do not have to worry, just file a claim with the insurance company and you will be reimbursed.

Let’s list some of the advantages:
- Your investment is safeguarded against a variety of unwanted incidents.
- The cost i.e. the premium we pay is as low as just 1% of the insured value.
- In case you are 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.

It looks too good to be true, that is why it is important to look at the fine print or even ask questions to the insurance agent and get the answers in writing and make it a part of the insurance agreement. Also take care that the same terms are included during renewal.

- Find out whether the coverage offered by the insurance company is automatically adjusted as a protection against inflation or do we have to review the policy every year.
- Can you make extended coverage for new items purchased during the year?
- If you are in a flood and/or earthquake prone area, does the insurance cover flood and/or earthquake?
- Compare terms and rates with multiple insurance companies and you will be surprised to see the difference in the premium rates.

Almost all home insurance policies have exclusions. Some of the most common ones are:
The company is not liable to make payment for:

- Loss or damage to a human being during an attempted burglary
- Any loss or damage on account of loss of livestock, motor vehicles, 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.