Every individual understands the importance of life insurance and health insurance in today’s time to secure their family’s financial future. But what about safeguarding the roof over their head? Owning a house is one of the biggest milestones and often takes years to build this asset. However, when it comes to safeguarding it, there is only a fraction of homeowners who even think about insuring their biggest asset. Did you hear about home insurance for the first time or are you a first-time home buyer? Check out this blog to know all the details about home insurance and why it is important for you.
What is home insurance and types of home insurance?
Home insurance is the safety net to protect homeowners against any unfortunate incident that can damage or destroy their house property. Having home insurance is not only for the structure of the property but also for the contents inside it. Moreover, home insurance can be taken not only by the owners but also by tenants. As per IRDAI, any person residing in India who possesses ownership or occupancy rights to a property is eligible to acquire a home insurance policy.
There are various types of home insurance available that can cater to different extent of coverage. These include:
Standard Fire and Special Perils Policy
This is the basic form of home insurance provided by most insurers. This policy covers a range of risks and perils that can cause damage to your property. It includes protection against fire, lightning, explosion, earthquake, storm, flood, impact damage (like a vehicle crashing into your property), and more. Essentially, it provides financial assistance to repair or rebuild your home and property if they are damaged due to these covered events.
Public Liability Coverage
Public liability coverage is essential in case someone who doesn’t live on your property gets injured or their property gets damaged while on your premises. For instance, if a guest trips and falls on a loose tile, this coverage would help cover the medical expenses or legal costs if they decide to sue for damages.
Burglary and Theft
This coverage is particularly important to safeguard your valuable possessions from theft or burglary. If someone breaks into your home and steals your belongings, this insurance will compensate you for the value of the stolen items. It’s important to keep an inventory of your possessions to aid in the claims process.
Personal accident coverage extends beyond just property damage. If you or your family members suffer an accidental injury or, in the worst case, death while within your home, this coverage provides financial support. It can help cover medical expenses, provide a payout in case of permanent disability, or offer a lump sum to your family in the event of your demise.
It is popularly said that a home is not made with just four walls. Well, this concept is also part of home insurance and content insurance is like an umbrella for your personal belongings within your home. It covers items such as furniture, electronics, clothing, jewelry, and other possessions. If these items are damaged or destroyed due to covered events (fire, theft, etc.), the policy will help replace or repair them, ensuring you don’t face a substantial financial setback.
If you’re a property owner who rents out your property, landlord insurance is crucial. It not only covers property damage due to perils but also offers protection against loss of rental income if your property becomes uninhabitable due to damage. Legal expenses for disputes with tenants can also be covered.
Just like a landlord, even if you are a tenant, you can purchase home insurance to protect your rights. For those renting a property, tenant insurance is essential to protect your personal belongings. Similar to contents insurance, it covers your possessions in case of damage or theft. Additionally, it provides liability coverage if you accidentally cause damage to the rented property.
Bharat Griha Raksha
Bharat Griha Raksha is one of the basic standard home insurance policies offered by IRDAi. This policy is effective from 1st April 2021. IRDAI has made it mandatory for all general insurance companies to offer this insurance plan and the coverage is usually capped at Rs. 10,00,000. As part of this insurance, 20% of the sum insured is provided for the general content of the home. It covers a range of perils similar to a standard fire and special perils policies, helping families protect their homes and possessions without a significant financial burden. It covers a range of perils similar to a standard fire and special perils policies, helping families protect their homes and possessions without a significant financial burden.
What are the documents needed to buy home insurance?
Some of the key documents needed to purchase home insurance include property proof, identity proof, address proof, property valuation proof, bank details, and past insurance (if any).
What are the inclusions and exclusions under a home insurance policy?
The inclusions and exclusions under any home insurance policy are varied based on the individual guidelines of the insurer. However, the general inclusions and exclusions in a home insurance policy are mentioned below.
- The policy generally provides coverage for damages to your home’s structure caused by events such as fire, lightning, earthquakes, floods, storms, etc., encompassing walls, roofs, floors, and other structural elements.
- Your policy can extend coverage to your belongings within your home, including furniture, appliances, electronics, and personal items, safeguarding them from similar risks.
- If someone sustains an injury on your property and files a lawsuit, the policy could offer coverage for legal responsibilities and medical costs, ensuring your financial security.
- Should your residence become uninhabitable due to a covered incident, the policy might assist in covering temporary accommodation expenses while repairs are undertaken.
- Many policies cover losses stemming from burglary, theft, or attempted theft of your insured possessions.
Did you know – Should home buyers buy home insurance from the same bank issuing a home loan?
While it’s convenient to buy home insurance from the same bank issuing a home loan, it’s advisable to compare offerings from different insurers to ensure you get the best coverage and terms for your needs.
- Damages that were present before obtaining the policy are generally excluded from coverage.
- Normal wear and tear of your home and belongings is not part of the coverage, as the policy focuses on sudden and unforeseen events.
- Damages resulting from your own negligence, such as inadequate property maintenance, might not be included in the policy coverage.
- Damages caused by acts of war, nuclear incidents, or acts of terrorism might be omitted from the coverage.
- Certain damages may not be covered if your home remains unoccupied for an extended duration without notifying the insurer.
- High-value items like jewelry or artwork might have coverage limitations in some policies, potentially necessitating additional coverage.
- Damages linked to commercial activities within your home might not fall under the coverage if your property is used for business purposes.
Can only home buyers buy home insurance?
No, home insurance is not limited to home buyers; even individuals who are tenants or occupants of a property can also purchase home insurance to protect their belongings and cover potential liabilities.
What are the tips or factors to consider while buying home insurance?
Buying home insurance is one of the major decisions for a homeowner or a home dweller. Therefore, they need to do a careful evaluation of the available policies to select one. Some of the important factors that have to be considered by policy buyers are highlighted below.
Coverage and inclusions
The primary point of consideration is the coverage offered under the policy. Policy buyers should ensure that the policy coverage is sufficient to cover the value of the property as well as the contents of the home. The next step is to understand the various inclusions under the policy to determine their usefulness. If the policy has many limitations and does not meet all the requirements of the policy buyer, it may not really serve the intended purpose. Therefore, prospective buyers should thoroughly review the policy’s coverage details to ascertain that it adequately addresses their needs.
The next important point of consideration is the exclusions under the policy. The policy has to specify these exclusions in a very clear manner without any ambiguity to avoid any hassles at the time of raising a claim. Exclusions are the are situations, events, or circumstances that the policy does not cover. Being aware of these exclusions can help avoid unpleasant surprises when filing a claim. Examples of common exclusions might include intentional damage, wear and tear, and certain types of high-value items.
The premium amount is the cost of the insurance policy. Buyers should assess their budget and determine if the premium is affordable. Comparing quotes from different insurers can provide insights into market rates and help find a balance between coverage and cost.
Claim process and customer support
A transparent and efficient claim process is crucial in the event of a loss. Buyers should inquire about the steps involved in filing a claim, the required documentation, and the expected time frame for claim settlement. Additionally, researching the insurer’s reputation for customer support can provide an understanding of the assistance one can expect during stressful times.
Reputation of the insurer
A transparent and efficient claim process is crucial in the event of a loss. Buyers should inquire about the steps involved in filing a claim, the required documentation, and the expected time frame for claim settlement. Additionally, the customer support provided by the insurer can also tell a lot about the assistance one can expect during stressful times. An efficient customer support system ensures higher customer retention as well as contributes to building the reputation of the insurer.
Policy add-ons or endorsements provide the opportunity to tailor the coverage to specific needs. Buyers should explore these additional options, such as coverage for valuable jewelry, electronics, or home office equipment. However, it’s important to evaluate whether these add-ons are necessary and if they justify the increase in premium.
Can a person modify the coverage amount on the home insurance policy?
Yes, a person can typically modify the coverage amount on their home insurance policy to better match their evolving needs and the value of their property and possessions.
Home insurance is an easy way to protect your biggest asset that you have secured after a lot of effort. Buying a home is still considered one of the major goals of life in our society, however, the concept of home insurance is not as popular in India as it should be. This scenario is now slowly changing with growing awareness among home buyers and home dwellers in the country.