Property Insurance – What is it and Why it’s Important

Owning your own home is a truly wonderful feeling. But have you taken all possible measures to protect it? Just locking up your home, doesn’t guarantee its safety. Disasters can strike uninformed, what if there’s a natural calamity or a fire break out in your house, and your house is ruined?

Buying a home insurance policy is a crucial step towards securing your home. Also given the time, energy, efforts and finances that go into buying house insurance is a must. Most of us, don’t realize the importance of taking it up until it’s too late. Buying home and contents insurance isn’t required by law, but safeguarding your biggest investment is an absolute must in case there happens to be a mishap.

What is House or Property Insurance?

A standard home insurance policy covers your home and its belongings, and also any third-party liability. Whether you own a flat or rent it there are various house and contents insurance packages available. Every package protects you against a defined set of calamities-fire, flood, theft, storm, etc. There are 4 other additional coverage packages for-property damage, personal liabilities, medical payments and supplementary living expenses.

For home insurance, your home is divided into two parts: buildings & contents

Building Insurance: It covers the building’s fabric along with all the permanent fixtures and built-in appliances. Generally all new build homes from prominent builders are insured. The coverage is against any property damage caused by floods, storms, fire, vandalism, any falling trees/branches, and impact from vehicles; it also includes damage from objects that may fall from an aircraft.

Content Insurance: It covers your belongings –furniture, clothes, electrical items etc. Content insurance provides you coverage for your belongings against fire, floods, earthquakes, vandalism and damage.

In case you own a home and wish to buy property insurance, you must opt for both types.
Additionally, those staying on rent can buy insurance for contents they own. Owners can also opt for loss of rent cover, which helps in case your rental property gets destroyed due to some peril, and your tenant vacates it and you stop receiving rent.

Why is Home or Property Insurance Important?

• Security against natural calamities

If any natural calamity occurs, one of the biggest losses is the loss of one’s home. It is then, when the damages to homes, properties, assets are substantially large. The losses that are insured by the policyholder are insured losses. So opting for home insurance can shield not only the structure of your house but also the contents.

• Protect Content, Valuables, Portable Equipment

Under home insurance, an individual can insure in-house items like appliances, furniture, clothes, portable equipment like cell-phones or laptops. Valuables such as your jewellery may be separately covered under home insurance too. The jewellery that you are wearing may be insured too; not just that you are wearing at home, but also while travelling anywhere in the world.

• Fire and Theft

In case of incidents such as fire, a home insurance policy not only helps you with the cost of construction, as per your policy’s terms and conditions but also offers add-ons such as resettlement cover for situations when you need to relocate due to severe damages at your home. If there is a theft in an insured house, a home insurance policy can cover stolen or damaged contents as well.

• Protection against liabilities

There could be cases where physical or property loss of a third person may be caused by some accident at your home, such as a cylinder blast or perhaps a repair activity may cause a loss to your neighbour’s property. Such contingencies can be effectively covered under home insurance by opting for public liability coverage.

• Flexible Valuation

Home insurance gives you the flexibility to choose between three types of cover.

• • Agreed Value Basis :-  Coverage on an agreed value basis is where the loss is settled by the insurer on the value of the property or content agreed by the insured at the time of purchasing the insurance policy.

• • Reinstatement Basis :- Coverage on Reinstatement Basis is where the insurer will settle the loss by replacing the damaged property or item with a new one.

• • Indemnity Basis :- Indemnity Basis is where the insured will get the compensation as per the market value of the house or item damaged after deduction for wear and tear.

• Add-on covers

Home insurance also offers add-on covers like loss of rent, temporary resettlement cover, public liability, pet dog insurance cover, ATM withdrawal cover, lost wallet cover, key and lock replacement cover which provides wider protection for your home.

Pointers While Insuring Home

• It is advisable to maintain proof of all your insured items in order to claim them
• Unauthorised construction cannot be insured or claimed, so make your investment wisely.
• At the time of policy renewal, get a quote of the reconstruction cost from a contractor for extensive coverage
• Remember a home insurance policy is valid only for the building and its components; it does not cover the land.
• Tenants can insure the contents of the house they are living in.

Exclusions

In general there are a few exclusions under home insurance policy. But, this can vary from company to company.

• Damage or loss incurred due to nuclear activity/radiation
• Civil war or Insurgence, Military Attack, Terrorism
• Minor damages due to termite infestation, cracks on the wall
• Intentional damage

Conclusion 

Most of us spend a major part of our lives paying our home loans but forget to take one essential protection measure, which is home insurance. One builds or buys a home which is a permanent asset and can face severe financial losses if not adequately protected. With such comprehensive benefits, getting your home insured is not an option, it is a necessity.