By Rohit Kothare on Jun 4, 2019 10:53:47 AM
Nothing is more important than a good, safe, and secure home. After all, it is the place where you and your loved ones can rejoice, weave thousands of memories that last for a lifetime. While we work really hard and put all life’s savings into buying or constructing a home, we forget that home needs protection in the form of insurance too.
So if you are having a question like - Why buy home insurance?
Then you must remember that home insurance cover ensures the structure of your home and its contents against fire and allied perils such as robbery, earthquake and lightning. Don’t wait for a tragedy to remind you of buying home insurance. Opt for it beforehand.
“Better safe than sorry.”
However, before going ahead with how to buy home insurance, take a look at some of the essential aspects of how home insurance is structured.
The value of your home comprises three broad components, which are as follows:
- Cost of land
- Cost of construction
- Cost of locality (a house in a Posh neighborhood would cost more)
Home insurance covers only the cost of construction
The real estate broker or the developer will inform you about the cost of construction.
Now, there are two ways to arrive at the insurance sum:
- Market value basis (market value is the cost of constructing your house after subtracting depreciation)
- Reinstatement basis (reinstatement basis is the cost of building your home without subtracting depreciation)
Though premiums for insurance plans that are based on a market-value basis are cheaper, reinstatement basis is the most preferred one.
A few points to remember about claim settlement are:
- Insurers will settle the claim only after the house is reconstructed or will make partial payments to help you rebuild the house.
- If you live in an apartment in a multi-storeyed building, you need to wait for others to reconstruct their houses as well for full settlement.
How to purchase home insurance and from where
Now that you have a brief understanding of home insurance. Let’s understand the buying process. And the first step in home insurance buying process is choosing the right insurance policy.
Do research about the various policies.
Check both online and offline market places.
Different insurance companies will have different types of plans, each offering some unique features. Choose the policy which best suits your requirements. For example, some insurers might provide flood recovery, but if you live in a non-flood prone area, then you might not need this one.
Once you have selected your policy, insurers or banks will require some information about the kind of property you wish to get insured. So be ready with the following details:
- Rent Agreement/Ownership registry
- Tenure of policy required
- Policy cover required only for structure or structure and contents
- Information on the property like location, age of the property, home type, sum insured, construction / built area, etc.
- Your details and ID proofs
Once you submit all the required details, you will get an estimate of the premium you shall be required to pay towards your chosen policy. If you are convinced, you can simply buy the plan by making the payment online or offline.
Before selecting an insurer, don’t forget to go through the following points:
Check premium and cover
Firstly, evaluate risks. For example, if you live in an earthquake-prone area, then you should ensure that your home insurance covers this risk. Also, check if the premium fits your budget or not. You can solicit premium quotes of individual insurers or compare premium quotes on your own.
Check claim settlement ratio
A good insurer is judged by the turnaround time of settling claims. The purpose of insurance will have no meaning if you do not get a claim when it is required. So, it is worthwhile to check the history of insurance companies before finalising one.
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List of popular home insurance policies in India (Not in order of priority)
1) TATA AIG Home Insurance
2) Chola Ms Home Insurance
3) Future Generali Home Insurance
4) IFFCO Tokio Home Insurance
5) Oriental Home Insurance
6) Reliance Home Insurance
7) Royal Sundaram Home Insurance
8) Bajaj Allianz Home Insurance
9) BHARTI AXA Home Insurance
10) HDFC ERGO Home Insurance
11) SBI Home Insurance
A frequently asked question - Is home insurance worth buying?
There is no denying that home insurance is a must, it not only provides comprehensive coverage to both the contents and structure of the home. It also secures home assets from any mishappening. Plus, home insurance gives satisfaction and reduces tension levels, in case of unforeseen circumstances.
For all the above factors, we highly recommend buying home insurance and then “Sada Sukhi Raho”
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