Invest in home insurance wisely

Invest in home insurance wisely

Invest in home insurance wisely

There is no such place like home. It is a place where you and your loved ones can rejoice, bond together and create thousands of memories that last for a lifetime. The question is have you protected this precious home from damage caused by  theft  or natural calamities? 

What is home insurance?

Home insurance, which is also known as ‘hazard insurance’ or ‘homeowner’s insurance’, is a type of insurance for your property that covers all houses or homes. Such polices provide the owner, occupant or tenant of the house along with its content and protection against the following:

 Natural causes: Such as fire, storm, flood, earthquake, lightning, inundation and landslide, among others

Man-made causes: Such as riots, strikes, explosions and terrorist attacks, damage by aircraft, implosion, malicious damage, missile tests leading to damage and leakages, among others.

Protection against damage by fire and protection against theft and burglary are common reasons why people take home insurance.

Some of the household items and goods that are covered under the policies include jewellery and  valuables, domestic appliances, artifacts, art and paintings and furniture.

There are two types of home insurance policies:

1. Basic fire insurance policy
2. Comprehensive policy, which also known as Householder’s Package Policy   (HPP).
 Fire insurance policy: Fire insurance policy covers your house against fire and other allied perils including lightening, storm, flood and riot. However, you may have to pay an extra premium in order to cover disasters such as earthquake and landslides with some insurance firms insuring your house and its contents against terrorism can also be done in some cases by buying an add-on cover.

 Comprehensive policy: A HPP offers several options for cover that you can avail in order to insure the contents of your house against burglary, damage, mechanical or electrical breakdown.

There are two basic types of covers in a comprehensive policy:

 The structure of the building against fire and other related perils is covered.
 The second type also covers the contents of the house plus the structure of the building.

 Exclusions in home insurance: It is important to note the exclusions in home insurance. Some of them are:

 Loss or damage caused by wear and tear and depreciation
 Loss of cash
 Loss or damage caused by war, invasion and act of foreign country
 Loss or damage caused by nuclear war
Loss, destruction or damage caused to any electronic equipment due to over-running or excessive pressure

 Important features of home insurance are: Home insurance provides complete protection for your property, the contents, and other interests of the insured in a single policy. 

 It covers your home against loss from fire, burglary and natural calamities
 It covers the contents of your home, including all portable equipment such as TV, fridge, computers and printers

 It covers for jewellery, valuables and works of art
 There are several home insurance plan types with various coverage options for you to choose from

 Some polices provide rent for alternate accommodation in case of damage
 There are several options  to insure  your home— either the flat/apartment/building only, or contents only, or both

Premiums are affordable and attractive rebates can be availed based on the selection of the tenure of the coverage

The difference between buying a cover for an independent house and an apartment: For an independent house, the owner can buy a home insurance cover individually which includes compound walls and staircase, among others.

In case of the apartment, the whole apartment including the common area, can be insured only by the residents’ association on behalf of all flat owners.

In such a case, a copy of the policy is given to each flat owner with details of the sum insured for individual flats. If an owner feels the insurance amount is insufficient, it can be increased through the association only

 Special perils: Special perils are the dangers caused by unforeseen contingencies.
Some of the special perils covered under home insurance policies are lightning, explosion/implosion, aircraft damage, riot, strike and malicious damage, loss, destruction or damage directly caused by storm, cyclone, typhoon, tempest, hurricane, tornado, flood or inundation. Bursting and/or overflowing of water tanks, apparatus and pipes, missile testing operations and leakage from automatic sprinkler installations are also included in the list.

(The writer is MD at Sinhasi Consultants)

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