The most recent floods in Chennai, the cyclone in Kolkata, and the cloudburst in Uttarakhand are instances where people were witness to nature’s turbulence.
Ramalingam, a homeowner in Chennai, had suffered from irrevocable damages to his brand new home caused by the cyclone and resultant floods. However, he was able to recover his losses by up to 80%.
Wondering how that’s possible? He took a simple step of precaution, to safeguard his dream. He insured his home.
Only 30% of homeowners in India insure their homes. That’s a shockingly low percentage, given that people spend their life savings on their dream homes.
Despite its importance, home insurance is not a popular choice in India because:-
- Most homeowners do little or no research on home insurance
- They are apprehensive toward high costs and long processes
- Or simply chance upon complex jargon and choose to ignore the need to insure their homes!
Our team, at Eden Park, with several years of experience and credibility in the Real Estate sector, understand the various questions that come up when ‘home insurance’ is brought up to homebuyers. In this blog, we aim to answer these questions, demystify myths, and reiterate the importance of insuring your home.
What does Home Insurance cover?
Let us dwell a bit more on the Ramalingam example. He was able to gain a cover for the damage caused by a tree that fell on his roof during the cyclone, and the contents that were damaged inside the house because of waterlogging.
Now, if you’ve been assuming that insuring your home protects you just from natural calamities, it’s time to eliminate that myth.
Most extensive and all-round insurance policies cover multiple things. Here are the most common ones;
- Damage to your home’s structure and contents.
- Safeguards you from damage caused by fire, burglary and natural calamities like earthquakes, floods, etc.
- Covers temporary living expenses in some cases.
- Some policies also cover veterinary costs and property-related lawsuits.
There is a range of specific covers available in the market. L&T General Insurance offers a cover called ‘Liability of Tenants to Landlord’ protecting you from damages to the landlord’s property. All you have to do is scour through policies and pick a thoroughly analyzed policy plan for yourself.
Remember that home insurance does not cover willful destruction and negligence. For instance; if there is a fire owing to old electrical wiring, or mishandling of gas equipment in the kitchen, then the damages are not covered.
Is Home Insurance required when you have Term Insurance?
There is a common misconception that term insurance covers ‘everything.’ Term Insurance is a life insurance policy that pays the sum insured on the unfortunate demise of the policyholder. Homeowners often assume that the money from term insurance can be used for the restoration of one’s house, and negate the need for home insurance.
For instance, a robbery in a person’s home when he/she is travelling is covered by Home Insurance and not Term insurance. Home Insurance is a separate insurance category that safeguards you from damages to your home.
Is Home Insurance costly?
Home Insurance is pocket-friendly and you pay a low premium for ample coverage. It does not tax your wallet and a variety of plans are out there that you can choose from.
For example; for an insured amount of about Rs. 40 Lakh of your building, you can get a policy worth just Rs. 2000 per year. Moreover, the most comprehensive policy, covering the entire house, can be bought at an approximate value of Rs. 5,000 per year.
Now, isn’t that a nominal price to pay for peace of mind in times of ambiguity?
Aren’t all Home Insurance plans similar?
Buying your policy is more than just calculating the values of your property and getting the cheapest premium plan. In order to meet clients’ wide range of needs, companies design several insurance products. It is imperative for you to compare these policies and then pick the best deal out of them. There are several online tools today for you to compare plans and you can seek expert help too.
How do I calculate the premium for Home Insurance policies?
Stuck with a lot of complicated formulae to calculate premium? Here’s a simple way- your premium usually depends upon the chosen sum insured of structure and content. This is calculated by multiplying the area of the structure to the cost of creation. The value of the house’s contents is determined by their current market value. All benefits, features, inclusions, and exclusions will completely depend upon the policy you choose.
When is the right time to insure my home?
If Ramalingam had waited for more than 3 months after his purchase to insure his home, he would have lost the life savings he had spent on his new home.
Insure when your house is new. Another factor that affects the sum of the insurance policy is the age of the building and general wear-and-tear. Buying a policy for your newly purchased home will ensure that premiums are lower, since the element of risk due to damage is lower in a new structure.
What should you keep in mind while buying a Home Insurance policy?
- Suitability – Look for comprehensive plans that match your needs.
- Time period – Home insurance can be purchased for a minimum of 1 to a maximum of 5 years. Always remember renewal dates.
- Fine print – Policies are worded differently and carry intricate details. Be meticulous with your analysis.
- House valuation – Incorrect evaluation may result in faulty assessment and inadequate coverage.
- Credit History – Ensure minimum pending liability before purchasing a home insurance plan.
Martin J. Ashton rightly said, “Home is your anchor, your port in a storm, your refuge, your happy place.” A Home Insurance policy above all, gives you mental peace. Knowing that you’ve taken precautionary measures to protect the abode of your dreams, allows your home to adapt to the ever-changing environment.
Don’t wait for the right moment to insure your home. Times are uncertain and your family’s safety is top priority. Access to policies and prices are just a click away and most processes are set up for the digital customer. Make that smart move!
Buying your dream home doesn’t have to wait either. Now is the perfect time. Enter your details below, schedule a virtual tour, or a safe site visit, and our team will guide you through the process.