Do you have a Home Insurance?

Studies claim that less than one per cent of people buy home insurance. Experts argue that home insurance guards against much more than fire, theft, and natural calamities – it ensures peace of mind. Read on…


Times Property

THE RESIDENCE of Sara K, a Bengaluru resident had caught fire due to a short circuit. While there was no loss of life, the property and contents inside the house were severely damaged. “However, since I had purchased a policy for Rs 40 lakh, it provided me with a safety net and significantly reduced my financial burden,” says Sara.


Sara’s foresightedness helped her secure her most treasured asset. Hence, just the way we take care of our health, we also need to protect our house against uncertain events damaging it. “Home insurance is a process of buying a provision that will guarantee a specified amount in case of any damage to your residential property. Any individual in whose name the house/flat is registered can purchase the home insurance in order to protect the structure as well as the contents of the house,” mentions Kaushlendra Singh Sengar, founder, Advisorymandi.


BEFORE BUYING THE COVER…


There are a few basic parameters that can make the process of buying a house insurance policy easier for you. Manish Jain, head – finance, Wealth Clinic points out a few fundamentals:


Coverage: While buying property insurance, you will come across options of insuring contents in the house, structure of the house or both. Depending on which plan you take, your premium and security of your property will differ. If the house you are staying in is a rented one, it would be sensible to insure just the contents.


What is covered and what is not: Most of the insurance companies offer coverage, which is more or less the same. However, what they do not cover may differ in each case. Do not forget to read the terms and conditions mentioned in the policy and things included and excluded.


Clarity on claim process is a must: As a thumb rule, get a clear understanding of the clauses included in the claim process. Make a note of all the required documents, proofs, etc so that you can secure your claim smoothly.


“The perils covered under the home owners insurance include – fire, lightning, storm, cyclone, hurricane, tornado, flood, earthquake, terrorist attack, landslide, and damage from an aircraft collision. On the other hand, the components that are not covered under the home owners insurance are – damage due to war and nuclear attack, wilful destruction of the property and loss of antiques or other works of art,” adds Subramanyam Brahmajoysula, head – underwriting and reinsurance, SBI General Insurance.


IN CASE OF A DISASTER…


In case of an unforeseen event, the policy holder must first intimate the insurance company by dialling their call center, contacting their agent/ company directly or by sending an SMS on the number mentioned on the policy document. If required, make temporary repairs. Also, if you need to relocate – do the needful; however, keep all the receipts with you for the claim. “At the time of purchasing the home insurance product, the sum insured is arrived at by multiplying the total floor area of the house and average cost of construction (keeping some margin for future inflation cost). At the time of claim, the same formula is applied once again on the basis of which the estimated loss is arrived at,” shares Brahmajoysula.


However, what happens if an individual has taken partial cover for contents? “For contents, the repairing/replacement cost will be reimbursed if the contents are insured on an reinstatement cost basis. However, if insured on a market value basis, depreciation will be applied while assessing the loss. On the other hand, the principal of under-insurance will be applied in case of partial insurance. For example, if an individual’s assets are worth Rs one lakh and he takes partial cover for Rs 50,000 and loses contents worth Rs 50,000, in that case he will not get Rs 50,000 as the claim; but will only get 50 per cent of the amount as he was underinsured by 50 per cent,” says Anik Jain, CEO, Symbo India Insurance Broking Ltd.


MYTH VERSUS REALITY :


Manish busts a few myths about home insurance:


Myth 1: Home insurance doesn’t cover Act of God.


Fact: Floods, fire, earthquake and other perils are usually covered under most of the home insurance policies. In almost all plans, this section is in fact mandatory.


Myth 2: Claim settlement is a complicated procedure.


Fact: In case of damage to the property, the insured home-owner must first inform the insurance company at the earliest about the damages caused to the home. Following the paperwork and claim-filing, the insurance company sends an agent to survey the losses incurred. Also, the company may ask for some documents from the insured to verify the claim. Once the documentation is done, the process of claim settlement is completed.


Myth 3: Burglary is not covered.


Fact: Not only are natural disasters covered under home insurance policies, but also damages owing to robbery or even an attempt at burglary. All precious items such as jewellery or important documents, semi-precious things such as electronics, etc can be covered. Remember to cover only the truly valuable items to keep your premium costs in check.


WHY IS HOME INSURANCE IMPORTANT?


Your house is undoubtedly the costliest asset, and the most treasured one for you. Any catastrophe can shake the entire structure of your house. The consequence of the same is likely to be that your house becomes completely unliveable. “And in the absence of an adequate insurance cover, an individual is left with a heavy financial burden. It is only to protect you and your house from any unforeseen circumstances that house insurance becomes crucial for house-owners and tenants alike. In case your house gets damaged, the emotional and financial pain of rebuilding a house or reinstalling its contents are painful, difficult and tedious. And a comprehensive home insurance policy spares you the horror of the same,” concludes Brahmajoysula.


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