What Is Home Insurance? How to Select the Right One with home loan?
Buying a home is no cakewalk. The dream of owning your own space is realized after years of savings and well-executed financial planning. After possession, you turn the house into a home by decorating it in a personalized way. So, it’s important that you protect your home and its contents from all types of natural disasters and man-made debacles like riots, burglary, vandalism, etc. And when you buy the property through home loan, having a home insurance policy becomes an absolute necessity. This is because any damage to the home would be a double blow on you,not only do you have to pay the loan EMI, but now you have to pay for repairs as well. So, opt for home insurance as well when you go for a home loan to protect yourself from any financial loss in the future.
1. Home Insurance Cover
A home insurance will provide protection to your home against any damage and save you from financial losses. The home insurance policies majorly cover the following:
Damage due to fire: Fire can completely destroy your dream home. But with home insurance, you can breathe easy asthe policy will take care of all the losses incurred.
Theft & burglary: If your valuable possessions are stolen, don’t panic. A home insurance policy covers the contents of the home too.
Natural disasters: We can’t stop nature’s fury and its trail of devastation. However, we can take some measures to financially secure ourselves with robust insurance coverage against earthquakes, cyclones and floods.
Mechanical breakdown: Home appliances and electronic gadgets are a part and parcel of every house. Any damage to these appliances due to short circuit or mechanical breakdown is covered.
Accidental damage: After spending a fortune on the fixtures and sanitary fittings, how would you feel if there’s an accidental damage? Worry not if you have home insurance in place as it will take away your financial stress.
Alternate accommodation: If your house becomes unsafe for living due to a peril covered under the policy and requires reconstruction for which you need to shift to an alternate accommodation, then the shifting expenses, additional rent, etc. will be paid by the insurer.
2. How to Choose the Right One?
Home insurance is one of the most important investments you should do while buying a new home or even for your current home. However, selecting the right insurance policy is not really easy. With hundreds of home insurances out there, it becomes quite overwhelming to select one.
If you are wondering how to select the right one, read on:
Which kind of Home Insurance You Need: Home insurance can be taken for the structure of the house or its contents. Generally, people go for both, but in some cases, people prefer to buy either of them. But experts say it all depends upon the location of your house.Suppose, your home’s location is more susceptible to natural disasters, then it is recommended to buy both kinds of insurances. However, if your home is in a safe place, then you can go for only contents insurance. Why the latter one though? Well, accidents can happen, and even burglary or thievery.
Set Your Budget: Getting your home insured is worth every penny, but it can be expensive too. Policies promise a sum-insured after evaluating the reconstruction or the reinstatement value of your home.Typically, for example, a 50 lakh home coverage and additional 10 lakh contents coverage can incur around INR 3000 a year. But, depending upon the policy, you select, it can vary a lot.You can even opt for more coverage if your budget allows you to do so. This is why before selecting any policy; it is important to set a budget.
Go Through the Fine Print: Upon shortlisting some policies and home insurance companies, make sure you read their fine prints. Because, insurers have their set processes to evaluate the damage caused to your home.The fine print will also mention all the things that are excluded from coverage. Make sure that the insurer is providing coverage for what you expect. Also, do go through all their terms and conditions.
However, most importantly, go for the policy that offers the right sum insured after assessing all your contents. An under-insured cover will be no good for you because then you might get burdened with financial issues in case of any calamity.
Still,wondering why you should spend a hefty amount to secure your home? Well, according to data, Asian countries like India are very susceptible to natural disasters. Imagine what would happen to your home if your city is hit by a natural disaster! You would have to spend a fortune on its repair and renovation. But if you get your home secured with the right home insurance policy, you can easily avoid paying for the damages.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.