Understanding the differences between home insurance and property insurance

Posted on: Jun 14, 2023 | 3 mins | Written by: HDFC ERGO Team

Understanding the differences between home insurance and property insurance

As the cost of properties is at an all-time high, it is only sensible to secure your assets from any unforeseen events or accidents. Securing your assets with home insurance or property insurance policies offers you complete peace of mind and compensation, should anything go wrong.

Understanding home insurance plans

Home insurance plans, otherwise known as homeowner’s insurance plans, are designed to protect your house against potential risks. The plan holds good for apartments, houses that are built, rented houses, bungalows, and apartments. If any unforeseen events result in damages to your house, the plan will compensate you for the same. You can claim the policy for any of the following perils.

1. Damages due to fire or smoke or explosion.

2. Damages due to natural causes such as storms, cyclones, lightning, etc.

3. Damages due to man-made causes such as riots, vandalism, theft, etc.

4. Damages due to collision of vehicles or even aeroplanes.

5. Damages due to the construction of roads or rail.

When should you buy a home insurance policy?

A home insurance plan is important for several reasons. The primary reason is the incredible amount of time and energy that you would have spent in building the home. Irrespective of whether you buy an apartment or bungalow or build a house from the ground up, it requires a lot of effort. Thus, it is only sensible to secure your efforts and house.

If you want to continue living in your home without any stress, investing in a home insurance plan is highly recommended. Though traditionally these plans were available to house owners, a few insurance providers are now offering the plans to tenants as well. The plan will protect your home against natural calamities like floods, cyclones, fires, riots, vandalism, etc.

Understanding property insurance plans

Now that the home is secured, what about the contents of the house? They can also be subject to damages due to a lot of the perils mentioned above. This is where a property insurance comes into the picture.

Simply put, it is a policy that secures various physical goods and equipment of a house or even a business establishment. It safeguards these goods and equipment from dangers such as theft, vandalism, fire, etc. Depending on what you are looking for, you can either opt for specific coverage or coverage for all risks.

When should you buy a property insurance policy?

By large, when the word property is used, people usually associate it with land or building of any type. However, a property is any kind of asset that you own. And in most cases, these assets require a considerable amount of money to buy them in the first place. This means, that any sort of damages to these assets can cause a substantial monetary loss to you.

Having a property insurance policy will protect you from any unforeseen financial losses that might arise from a property. Since properties can range either from a single-floor house that you have built or an organisation, there are different policy types for various coverages. Some of these popular insurance plans include:

1. Fire insurance policy,

2. Homeowner’s insurance policy,

3. Shopkeeper’s insurance policy,

4. Office insurance policy, and

5. Tenant’s insurance policy.

Major differences between home insurance and property insurance

Though they might seem similar, home insurance and property insurance plans differ a fair bit from each other. If you want to know property insurance plan vs home insurance, here are the major differences between them both.

1. Purpose

While a home insurance policy is predominantly for residential type of buildings, property insurance is usually used for commercial purposes.

2. Term

The home insurance policy usually ranges between 1 to 30 years, while the term of property insurance largely depends on the policy type.

3. Add-ons

A major difference as far as property insurance vs home insurance is concerned, are the available add-ons. You can choose earthquake cover, debris removal cover, pets cover, leakage and contamination cover as add-ons. While for property insurance plans, you can choose from terrorism cover, mould and fungi cover, employees property cover, escalation cover, etc.

Tips to choose the right policy

Now that you have some clarity when it comes to property insurance vs homeowners insurance, here are some tips to help you choose the right plan.

1. The first step is to understand the type of policy that is essential for your property or house. Once you know the right plan based on its coverage, it becomes easier to continue with the process.

2. Knowing your exact requirements such as the sum insured and the need for exact coverage will make the policy-buying process easier.

3. You can shop around to find a policy that fits your needs and budget at the same time.

4. Do not forget to check the claim history of the insurance provider that you are selecting.

5. By paying a small premium, you can choose add-ons to make the plan even more robust.

Conclusion

It is imperative that you opt for a home insurance policy or a property insurance policy, depending on the type of building that you have. Since these assets cost a considerable amount of money, any maintenance or damages can be significant as well. Understanding property insurance policy vs homeowners insurance plans will further help you to pick the apt policy.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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