Important Points to Keep in Mind When Buying Home insurance

Your home is your holy place, your place of refuge and your prized possession. To most of us, it’s not just a place where we eat, pray and sleep. It’s our private museum used to store all our valuables and a place where memories are made. We keep a lot of precious valuables at home, gold, important document, expensive electronics and more and that’s not all we invest a lot of money into construction and building it. Have you ever thought of what will happen if a sudden fire, vandalism, or natural calamity like an earthquake would destroy your home? A structure that you invested so much time and money in, will be destroyed. What can you do? While you cannot predict these calamities, you can, however, cover the damage cost with a good home insurance.

In India, most of us look at insurance as an investment that can offer tax benefits. We rearly look at how insurance can offer security. This is why a home insurance is normally something you may not think of investing in but it can make your life easier and secure your home. Wouldn’t you want to protect your biggest investment? We’re sure you do, and to do that you will need an insurance that covers your home completely. Most often people take out home insurance only to find out that is does not give them adequate cover when disaster strikes. You do not want that to happen to you.

 

Here are a few important points to remember before purchasing a home insurance.

Type of insurance: Firstly, you should know the types of home insurances there are. Home insurance is divided into two main types; building insurance and contents insurance. Building insurance covers the structure or fabric of the building and any permanent fixtures and built-in appliance while contents insurance covers all your belongings and valuables in the house, like your gold, furniture, clothes etc. If you own a house, taking out both building and contents insurance is advisable, however, if you live in a rented house, you can take out contents insurance that can protect you against theft, vandalism etc.

Another important thing to keep in mind is what mishaps or calamities do each of the two insurance covers: A building insurance will usually cover damages from floods, fire, falling trees or branches, earthquakes vandalism etc. Contents insurance will usually cover your belonging from theft, fire, water damage from floods, etc.

The amount of cover: When deciding to take out a home insurance policy the most important aspect is to ensure that you get enough coverage. For instance, in a building insurance, you have to make sure that the insurance covers the rebuild value of your house and not the market value. Similarly while taking out contents insurance, you will need an insurance that covers all the valuable items in your home. A great way to do this is by making a note of the value of all the contents of your home and coming to an approximate amount. You can use this figure as an estimate to decide the sum insured of your insurance plan. This is an important step as undervaluing your home and contents will leave you with a lower cover when misfortune occurs and overvaluing your home and content means you’ll be paying a higher premium. Remember while doing this you should consider, all your belongings, including furniture and all electronics.

Cover for your unusual valuables: Not all insurance cover valuables like windmills, thatched roofs, sidings etc this is why it’s important to check with your insurance provider if these items are covered and if not you may need to take out another insurance for that. You need to also remember, premiums for unusual properties tend to be higher as the risk is greater.

 

Consider taking out an insurance that comes with the “New for Old” benefit: With this addon, your old damaged furniture or building structure will be replaced with new identical or similar products.

Check for NCD (no claim discounts): An NCD is a reward an insurer gives the policyholder. If the policyholder does not make a claim for a certain time period, the insurer will usually give the policyholder a discount on the premium that can go up to 40%.

Cover away from home: While taking out a home insurance policy you also have to consider getting cover away from home. For instance, valuable contents like a laptop, your bike or jewellery are covered while at home but if you often travel with them you need to ensure that they are covered while they are away from home too.

Carefully read the terms and conditions of your insurance policy: Most people tend to overlook the terms and conditions of the policy once they have considered the above points. This is a costly mistake you don’t want to make. By reading the terms of your policy you will know what is covered, the extent of cover and any hidden clauses which may alter your decision about buying the policy.

Compare insurance: Choosing an insurance is a difficult task, it involves time and research. Finding one good insurance policy is not enough, you need to compare it with other policies in the market.

In conclusion, remember that a home insurance is not just a tool that aids tax exemptions but an investment that secures your biggest asset. Therefore it is important to choose wisely and consider the above points before taking out a home insurance policy.