Importance of HOME insurance

Dear friends,

Owning own home is everyone’s dream. For achieving this dream all of us burn the midnight all. Particular in present time for middle class it has become almost impossible dream to become the master of own dream home. An old saying 'home is where the heart is' very true. After so much  hard work we get our dream home and it make perfect sense to ensure that our homes are protected from peril (unforeseen event) . The best way to do this is through home insurance.

In our country home insurance is not very well known term and very few people know about it. I have read so many article and discussed about it with many friends. I am trying here to some light on “home insurance”.

What is home insurance ?  This term ‘home insurance’ is  also known as home owner / house-holder insurance. It is an arrangement by which you can protect the structure of your home and also your precious belongings from perils such as fire, earthquakes, storms, floods or other calamities. It also can cover your valuable personal property such as electronics, jewellery, art and so on from burglary / theft and others.
So why we need home insurance that is the question every individual think. To make our dream home we spent our hard earned money and also put a lot of money into its beautification. Most of our life pass to pay home loan EMI or accumulate the money to purchase home in one payment. If something happens like a flood, a pipe bursting, a fire, an earthquake or any such calamity, within a few seconds or minutes, our wealth can be damaged or destroyed. This insurance will protect your wealth by reimbursing you for damages incurred through any such insured calamity.
The next question what is the cover under home insurance policy or what is not covered. It does not cover willful property destruction of structure of home or the belonging in the home. It also does not cover damage by nuclear fuel exposure  and terrorism , war or invasion regular wear and tear in the home , or damage caused by the insured person.
Now a days some insurance companies cover damage by terrorism by rider (optional cover). Some companies cover art, electronics and white goods also through other insurance policies or riders it depends upon what you need and which insurance company you choose for cover.

For sum insured of the policy there are two method , one is Reconstruction value and second is market value after adjusting depreciation. The sum insured for structure of the home is calculate by reconstruction value, while the contents of your home will be covered on the basis of their market value, after taking into account depreciation.
Reconstruction value is the value of built up area multiplied by construction rate per square foot. It always lower than actual purchase cost of home. It also known as Replacement Value.

Claim Procedure:

Once a claim filed by the insured person , the insurance company appoint a Surveyor. The Surveyor visit your home to assess the damage, and based on his assessment, the insurance company will settle the claim.

You can not insured your home under home owner insurance policies if you use your home for other activities (commercial or manufacturing) other than residence. Different policies have different inclusions and exclusions. Whether your policy covers, alternate accommodation, modular kitchens, your laptop or digital camera, jewellery cover and so on.  We should read carefully Policy Wordings in detail.

We purchase any insurance for protection purposes. We insure our health and the health of our family, our life, our vehical using various types of insurance policies like mediclaim, term Insurance, motor insurance etc. Home insurance is an excellent thing to insure your home. After all, it is your most valuable asset. Before taking any insurance policy however, it is important to go through the policy yourself, don't blindly listen to what your agent or broker tells you. You may find that one policy covers more things for the same premium as another which covers fewer things. Go through the documents yourself very carefully before taking any insurance policy. An expert financial planner can help you take control of your comprehensive financial life.

(The above article based on various article and study. You are most welcome to ask any query or giving your feedback.)

Regards,

Arvind Trivedi