How to protect your home with insurance cover?

Your house is like a heaven on earth. In life, people work hard day-in and day-out to finally build a castle of their happiness. A house owned is the most important dream of your life. However, natural calamities, or stealing and burglary are some of the incidences that don’t knock your door to damage your house or inside property. They come unexpected and can shatter your dreams in minutes forever. This will not only be a huge financial loss but also a mental setback and physical pain of rebuilding your dream once again. One of the best modern day tools to cope with the financial losses would be purchasing home insurance policy.

A home insurance is form of property cover designed to protect an individual's home against damages to the house itself, or to possessions in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property. Ideally a home cover protects the structure of your house and its contents from calamities like earthquakes, floods, fire, explosion, cyclones, lightening etc. Also covered under insurance are things like theft and burglary. When there are losses that include in the list of documents mentioned by insurance company, the insurer pay on the basis of the house’s reconstruction cost. The value is calculated on the basis of the built-up area and the construction cost, generally fixed by the company.

There are mainly two types of insurance in India:

Building insurance: A building cover is important part of home insurance. Most housing loan companies have made it mandatory for any project to have building insurance before they sanction any loan. This cover protects only the structure of the property. It insures the amount that you would need to reconstruct the house, in case damage is done to your property.

Content insurance: This policy covers things inside the house. Many people keep expensive ornaments, gold and silver etc. in house. At this time this insurance becomes very valuable if there is any crime of stealing or burglary. The amount of money is assessed as per either how much it will cost to replace it or according to its current market value. Besides, other than jewellery the insurance also protects your valuables against fire, theft, accidental breakage, damaged caused to electric appliances due to electrical and mechanical breakdown.

Things to remember before you buy

While covers and premium rates vary slightly from insurers to insurers, shopping home insurance is not very difficult. However, there are a few things you should keep in mind.

Adequacy:

The sum insured will be the basis of compensation therefore it should reflect the correct property value. Most people mistakenly choose the insurance amount compared to market value. However, you need to bear in mind that company pays on a reinstatement basis, which keeps fluctuating with construction costs. Generally you can take around 10-15% hike in the construction costs and quote for an insurance amount. If possible check construction rates from the Municipal Corporation or real estate websites.

Tenure:

You can either go for an annual cover or choose a multi-year policy. The benefit of annual home insurance policy would be it gives you the option to revisit the sum insured's adequacy every year. If you feel so that there are any changes in property, asset or place value you can increase or decrease the cover accordingly. Besides, in long-term policy you can get discount which can be as high as 50%, depending on the tenure.

Service Level:

Home insurance is very tricky concept. Although all policies might look identical it’s the service that makes them stand out differently. It will be wise to check the claim settlement procedure, simplified process and prior records of the insurer. A customer-friendly approach for reporting and handling of claims will be of immense help in the event of a loss.

A person invests his or her life savings in buying a house therefore it is important to get it insured to protect your interest as an Individual/family, to protect yourself/in case you have taken housing loan and last but not the least to protect yourself from third party liability.