Most of us live in the belief that floods, earthquakes, fires, thefts don't happen to us, they happen to others. Until it hits in the face, like it did to the citizens of Chennai where severe floods led to destruction of property worth more than Rs 48,000 crores. Home insurance is the last thing on most people's mind but should you make it a priority? Let's decode 5 reasons and tips on why insuring your home is absolutely important.
1) What is home insurance?– A good home insurance doesn't just protect the structure of the building against man-made and natural disasters, it also provides financial protection to the furniture, appliances and even prized possessions like jewellery and artwork in the home. A very important point to note is that the policy won't cover the market value of your property, it only insures the cost of the building structure.
2) Eligibility- Indian residents who own or occupy a property can get a Home Insurance Policy. Even a housing society can buy a policy in its name that will cover the society building as well as common utilities. Many insurance companies provide cover for tenants as well. In this case, they can only insure the contents like furniture, electrical appliances, etc that they have bought.
3) Add-on covers- A typical Home Insurance policy covers damage to building structure and contents due to natural and man-made structures like fire, theft, burglary, riot, strike, floods, lightning, etc but faced with the present realities, insurance providers have also started provided add-on covers like
- Terrorism cover which provides financial protection to your house and the contents against acts of terrorism.
- Cover for Domestic Appliances and
- Cover for Valuables including Jewellery
These covers come at a little extra cost.
4) Exclusions- Remember, a home insurance cover will not protect you against
- Loss or damage caused by wear & tear and depreciation
- Loss of cash
- Loss or damage caused by war, invasion, act of foreign country
- Loss or damage caused by nuclear war or
- Loss, destruction or damage caused to any electronic equipment due to over-running or excessive pressure
5) Cost and service providers- Average annual premium to cover the structure and contents for a 0-10 year old property should be anywhere around 0.2% of the property cover. This essentially means if you take an insurance cover of Rs 1 crore, you will have to shell out Rs 20,000 annually. The amount will differ depending on the add-on covers you opt for.
Some of the PSUs offering home insurance include
- New India Assurance
- SBI Home Insurance
- Oriental Home Insurance
In private sector, some of the popular insurance providers are
- Bajaj Allianz Home Insurance
- Bharti AXA Home Insurance
- HDFC Ergo Home Insurance
- ICICI Home Insurance
- TATA AIG Home Insurance
For the expert take on home insurance, watch this video: