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Purchasing a Home Insurance? 7 things to be considered

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Published on June 30, 2021. EST READ TIME: 2 minutes



Our homes are our special havens where our inner being and aspirations find expression. All of us, in one way or the other- value and treasure our home and wish to protect it from damage and harm as long as possible.

However,  maintenance and upkeep of a house is a matter of burdensome responsibility one that can tax our savings and wealth. A house always faces prospects of wear and tear primarily because of the effect of natural elements on it over a course of time.

Consequently, a reliable homeowner has to take upon his shoulders the responsibility of keeping his house in good repair.

One of the tools that can help him immensely in this quest is the home insurance policy.

Here are the questions one should consider before purchasing home insurance:

1. Who can buy a home insurance scheme?

Anybody residing in India who is the owner of the property or currently occupies a property can buy home insurance.  Those who live in rented accommodation can also purchase home insurance.

2. On what basis is the premium of a home insurance policy determined?

There are several factors that go into assessing the total quantum of premium that one has to pay to avail of home insurance. Factors like location, the current condition of the house, installation of protective devices, claims history and lifestyle choices of the owner also matter.

Consider, for instance, that the premium of a house is most likely to shoot up if it is located in an area that is prone to natural calamities and disasters such as cyclones or storms or floods. Premium can also shoot up if the house is located in an area where anti-social activities and elements are quite active. Neighbourhoods with higher crime and theft rates are also likely to witness high premiums.

Additionally, the age of the house is also a key determining factor. An old house might be in need of greater repair and upkeep. A thorough assessment is made of the materials used during construction to arrive at the right level of premium for the house.

In case, the house has fire alarms, smoke detectors, sprinkler systems and burglar alarm systems, then the premium reduces as the possible payout in case of damage also goes down substantially.

Further, the lifestyle choices of the owner matter as well. A smoker will have to pay a larger premium compared to a non-smoker.

1. Can a burglary claim be made under home insurance?

Yes, a burglary claim does fall in the coverage provided under a home insurance scheme.

2. What documents are you required to submit in case of a burglary claim?

In case your house has been robbed, you will need to submit the original receipts of all the items that were stolen, a copy of an FIR (First Information Report) filed with the local police and a duly filled claim form.

3. What is the status of the home insurance policy once the house is sold?

The insurance policy ceases to have any effect the moment the house is transferred to someone else.

4. Who can cancel a home insurance policy?

The company can cancel the home insurance policy if it finds out that gross misrepresentations have been made by the homeowner or serious fraud is apparent from the actions of the owner. The company can also choose to cancel the home insurance if the owner refuses to pay the premium due.

On the other hand, a homeowner can opt not to renew his insurance policy and the policy will consequently lapse. In case, the company chooses not to renew the home insurance policy, it can do so after providing an adequate explanation. The homeowner can choose to escalate the matter if he is not satisfied with the response.

5. What is excluded from coverage in a home insurance policy?

There are several exclusions in a home insurance policy and it is imperative that the homeowner scan the fine print of the policy to understand the ins and outs of the policy. In most cases, the home insurance policy offers limited coverage on jewellery, funds, other assets and silverware. Additionally, most insurance policies will not provide coverage for any damage arising from surface waters or waters from choked sinks and drain flooding floors.

Any damage resulting from earthquakes, war, nuclear destruction or an intentional act of the homeowner or other family members is also not covered under the home insurance policy. Further, any damage caused by the operation of a car, aircraft, or any other machine with a motor capacity greater than 50 horsepower is excluded from the coverage.

The final word:

Once a homeowner registers a claim with an insurance company, he is contacted by the surveyor within a period of 48 hours who assesses the damage to the house. The company also sends across a claim form which is to be filled and submitted in the next few days.

All in all, houses, in the long run, tend to wear down. Smart homeowners can choose to protect their wealth and savings from an unanticipated spike in house construction and maintenance costs by purchasing comprehensive home insurance plans.

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