It’s common knowledge that home insurance is something we all need. Unless you’re well-versed with the nuances of insurance policies, you’re probably unsure about how much home insurance you need to keep your home safe and secure.
In this article, we’ll take a look at the various facets of home insurance; what it can cover, how much you need, and some common mistakes people tend to make while insuring their homes. All these help to answer the question of just how much insurance is necessary.
The Importance of Your Home
A home is something most people aspire to own when they start earning. It is a sanctuary where you find refuge from the stress of the world. Such an indispensable asset needs to be protected from risks, and this is where home insurance comes in.
Understanding Home Insurance
In the simplest sense, home insurance in India is coverage against financial losses that you may incur in case of damage or destruction of your home. It covers the expenditure necessary to restore/repair your home if it gets damaged or destroyed due to unforeseen circumstances.
Why You Need Home Insurance
As a homeowner, you’re aware of the risks your home faces, like burglary, fire, earthquakes, and riots. In case something unfortunate does transpire, it would lead to huge financial losses in the form of expenses for the restoration of your home. However, if your home was insured against such damage, you would be able to escape that financial risk and potential burden.
When you do a basic risks-benefits analysis, it becomes quite apparent that buying an insurance policy will work out much cheaper in the long run.
What Your Home Insurance Plan Covers
While buying home insurance, it’s necessary to know what kind of damage your home can be insured against. The following is a list of the basic risks against which insurance is normally provided according to Investopedia:
- Damage caused by riots and strikes, such as intentional fires and breakage of property
- Natural calamities like lightning strikes, floods, hurricanes, etc.
- Earthquakes and landslides
- Damages due to acts of terrorism
And here is a list of things that insurance policies do not cover:
- Damage due to age, wear and tear of property
- Damages incurred due to war, invasion, etc.
- Properties under construction
- Damages due to negligence or improper maintenance
Choosing a Policy That Suits You
There are a number of companies offering home insurance policies at competitive prices. Here are a few things you should look at while choosing an insurance policy for your home.
Coverage: This is the list of risks that your insurance policy protects you from, and includes situations like theft, riots, fire, landslides, etc. Since coverage varies from one policy to another, you’ll need to choose a policy that covers damage from risks that your house is susceptible to.
Premium: This is the money that you, as a policyholder, are required to pay the insurance provider, on a regular basis. Pick a premium amount which won’t put unnecessary stress on your finances.
Claim Settlement Time: No insurance claim gets paid out instantaneously: insurance companies take some time to assess the nature and extent of the damage. Choose a financier who doesn’t take too much time to settle your insurance claim.
Select a policy that provides a combination of features that suits you best. The Silver Home Insurance Plan provided by ICICI Lombard is an excellent choice if you’re looking for a good balance between coverage and premiums. The policy covers damages due to fire, theft, terrorist attacks, and settles claims within 48 hours. You also get to claim rent allowance for a temporary accommodation while your house gets repaired.
The Vital Question: How Much Is Enough?
According to Forbes, failing to have enough insurance to cover the cost of repairs is the biggest mistakes you can make while buying a home insurance policy. Another common error is covering only the current price of the property. You need to choose an amount after estimating the cost of the property a few years down the line. It is essential to have an expert estimate the value of property keeping in mind appreciation and potential costs of repair and restoration. Make sure none of your household assets is left out when it comes to buying a home insurance policy.