Home can be the largest investment ever. Ensure that it is well covered by a proper kind of home insurance.
Indian insurance companies also provide diverse policies of home insurance. In this case, we assist you in calculating the extent of home cover that suits you.
Why buy home insurance?
There are a lot of people who do not purchase home insurance due to such high premiums, or simply because they do not believe that it is worth it. However, have you ever wondered how expensive it would be to have your home and everything you have renovated again?
Home insurance will help you and your investment. It will not just cover your house, but also your contents such as your personal belongings, electronics and appliances.
Comprehensive home insurance will compensate you for the loss that you incur upon unforeseen events that result in physical loss, damage, or destruction of the building of your home, and items or objects inside the building.
Home insurance vs home loans insurance.
You are better accustomed to the name of home loan insurance, or mortgage loan insurance. This is a mortgage insurance which is insured on the mortgage with which the property is purchased and not insurance on the property itself.
The home loan insurance helps to settle the home loan in case of death or disability. It does not safeguard the building and its contents. Home insurance has to be bought separately.
What is the amount of home insurance you require?
The Indian subcontinent is one of the most vulnerable as far as natural disasters and climatic disasters are concerned. Landslides, earthquakes, tropical cyclones and flooding are common damages. Burglaries are historically common during summer when people are on holiday, and electrical fires due to extreme heat are on the increase.
Home and property insurance would be the price of peace of mind. It is better to recommend that you buy an insurance policy that is enough to compensate for the amount you need to replace your possessions and rebuild your home in case of an emergency.
There are various classes of house insurance.
Buildings insurance
Buildings insurance takes care of the physical structure of your home, including garages, sheds and fences. You need to have enough insurance to finance the full rebuilding cost of your house in case of a failure. This is referred to as the sum insured.
Rebuilding your house is not going to be as expensive as the amount of money you used to buy the property, or its current value. Rebuild cost is normally lower since it does not involve the value of the land.
Assuming that you have just applied to take a mortgage, you will have been provided with a valuation that will contain a rebuild cost.
The cost of reconstruction would be approximated depending on:
- The additions to the home, e.g., the addition of an extension or conservatory.
- There are non-standard construction properties.
- The costs of construction are high in the long run.
Contents insurance
When you purchase contents insurance, you are purchasing insurance that insures your goods within your home. You need to be able to value them appropriately. Seeing that you may need to replace them at one point or another, you will need a reasonable amount of contents insurance to cover the damages.
To calculate the value of your contents, you can:
- Write down things in each room of your home.
- Calculate the expense of replacing each item with a new one.
- Total the expenses of everything that you have.
To do this, both the contents insurance calculators and the prices of most items can be found online. You can wish to have any of your valuables, like antiques or jewellery, have it appraised by an expert.
In other insurance policies, you are limited on the amount of claim you can make on the same item. Any valuables that are over that limit may require additional cover.
Diminution of rent and rent of alternative accommodation.
This kind of policy will compensate for the amount between your rent or other place of accommodation in case your house cannot be inhabited anymore. The maximum number of years covered is normally 3. The loss of rent insurance will also cover the rentals of landlords in case the property is not available due to damage. In order to claim, you will have to submit an official certificate stating that you have an unfit property that cannot be inhabited.
Bharat Griha Raksha insurance.
In April 2021, the IRDAI obliged all general insurance firms to sell a standard home insurance policy, named Bharat Griha Raksha (BGR). The BGR offers all-inclusive insurance on residential buildings and their contents. It also provides optional valuable contents and personal accident cover at low premiums.
One needs to look closely at their home insurance policy. This can have some exclusions, like fire/ debris removal, which you might want to cover by insurance add-ons.
