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Home insurance policy - What is covered?

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Buying or building a home is one of the greatest milestones in anyone’s life and also one of the major investments. Hence,it needs maximum protection against unforeseen events. With a chunk of your life’s savings invested in it,it only makes sense to safeguard your home the right way. So,buying a comprehensive home insurance policy is absolutely necessary. 

A basic home insurance plan covers the structure of the house as well as the contents inside. However,an upgraded version of this plan is home insurance against natural disasters,which offers protection against crises like floods,cyclones,and earthquakes,to name a few,in addition to manmade events like arson,riots and terrorism.

A home insurance is classified into two types:

• Home Insurance for Tenants: This is a home insurance policy for renters who want to protect their contents in the landlord’s house,and also safeguard themselves in case of an accident inside the property. 

• Home Insurance for Owners: This home insurance policy is for owners,wherein,they can protect their homes,right from the infrastructure to the contents inside the house,even if they have rented out the place to someone else. It protects them against damages that may or may not be caused by the tenants as well. 

What is covered by a home insurance policy?

The right home insurance policy can cover most aspects of your dream home and also save you from financial distress in case of any accidents or adversities. Here are some elements that are covered in a home insurance policy.

Fire: Fire has the potential to cause huge damage to your house. So in case certain contents are affected by a fire accident or there is substantial damage to the entire property,a home insurance plan will cover the costs of rebuilding it. 

Accidental Damage: So,you have equipped your house with expensive fittings and housewares for the much deserved comfort and luxury. What would you do if they were damaged in an accident? Simple - claim insurance and get them fixed since your home insurance policy will have the provision to cover accidental damage. 

Electrical Damage and Breakdown: These days,homes are fitted with smart appliances and electrical fittings. So,it is only natural that electrical breakdowns might occur suddenly. However,if you have a home insurance plan,you will be covered against an electrical breakdown. 

Natural Calamities and Manmade Hazards: If you are someone living in a calamity zone area or a sensitive neighbourhood prone to arson or riots (unfortunately),you must have a home insurance policy to protect your home against these incidents. This way,you are also keeping your financial assets untouched and saving for the future. 

Alternate Accommodation: You never know what might happen in future. Your beloved home might need some emergency fixture or you might have to shift to a different accommodation temporarily,like in case of a flood. The right home insurance policy will cover the expenses involved,so that you can focus on the big project at hand. The policy will also cover any brokerage or rectifying issues if your home becomes unfit for living. 

What is not covered?

While most home insurance policies are designed to cover most aspects of your home,there are certain contents and aspects related to it that are not included in the plan. 

Here are certain exclusions which are not covered in your home insurance policy. 

War: If your home is stuck in war conflict or activities like invasion,hostile activities,acts of foreign enemies - the damage incurred will not be covered by a home insurance policy. 

Wilful Misconduct: Though unforeseen costs and losses are covered under home insurance,any act of purposeful damage,conducted during wilful actions,will not be considered for any coverage. 

Precious Assets: If your home has precious items like works of art,coins,stamps and similar items,any damage arising out of these assets shall not be considered for an insurance cover. 

Old Assets: You might be attached to your old items,an heirloom maybe. Though the emotional value of these contents is always respected,if it is more than 10 years old,it will not be eligible for any insurance coverage. 

Unforeseeable Consequential Losses: Such losses are a result of actions that are not natural and set apart from the regular course of damage. In such cases,losses will not be covered by the home insurance plan. 

Under Construction Homes: If your home is under construction,then you are automatically not eligible for a home insurance policy. 

Cost of Land: Your home insurance will only protect your home and the contents inside. However,the land on which it rests is excluded from coverage. 

It is important that you read through the exclusions of your home insurance policy and educate yourself with respect to the assets that are covered,to avoid future surprises and disappointments. 

Why should you have a home insurance policy?

Here are some reasons why you should have a home insurance plan. 

Financial Savings: Having a home and maintaining it is a capital intensive process in itself. However,fixing it in case of crises and adversities is a costly affair that can put a serious dent in your savings or financial plans. Having a home insurance plan saves you from this financial dent. 

Long Term and Flexibility Benefits: If you are in touch with the right insurance service provider,you can customise your home insurance policy as per your requirements. For instance,you can choose an insurance plan with different tenures,ranging from 1 year to 5 years,based on your need,and pay the premium only for that timeline. This will negate the chances of paying extra premium. 

Conclusion

Having home insurance policy is a safety net that you owe to yourself as well as your family members who live with you. So,compare the offerings of different providers,consult an insurance expert,assess your needs and then choose an insurance policy that is iron-clad and perfect for you. 

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