Why is property insurance important?

Buying a home is generally an individual’s most expensive investment. While we are all concerned about insuring our lives and vehicles, we tend to ignore a critical asset we own-our home. When availing loan for this coveted asset, we seldom ponder over the importance of property insurance. Come to think of it, property insurance comes at an almost negligible cost given the security it provides.

But what is property insurance?

What is Property Insurance? Why should it be bought along with your home loan?

A property is prone to damage by way of a natural or a man-made disaster. The damages could be through an earthquake, fire at home or office, any storm (like Tsunamis), riots (India has witnessed many), theft, etc. Property insurance gives coverage to both residential and commercial units from such damages. The importance of property insurance lies in the fact that in case of a calamity, you may get full or partial reimbursement of your loss as a result of property damages.

Unforeseen contingencies may occur at any time. Remember multiple earthquakes in Nepal in 2015 that brought colossal losses to life and property. Similarly earthquake at Bhuj, Gujarat in 2001. Time and tide wait for none. The sole reason to insure your home/ other property is the uncertainty of the future. We don’t know what may happen tomorrow.

Property insurance addresses such issues and provides coverage not only to the property but also to its contents. It is a huge breather for insurance holders when setting up their homes or commercial units after the disaster.

Banks and financial institutions offer different types of insurance products for properties. These days, home loans come with offers on buying home insurance too. So, you don’t have to out of the way to secure one. You may opt to insure your jewelry, clothes, furniture, electronic appliances, etc. also along with your home insurance.

Let us discuss how the property insurance act covers the different aspects of insurance and the various types of property insurance in India.

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Property Insurance- Types & Importance of buying one with a Home Loan

Each financial institution has its own set of property insurance products. Almost every financial institution that you seek a home loan from will pitch their property insurance products to you. Let us explore the most commonly bought property insurance types and how they safeguard your interests.

• Insurance for Homeowners

This is the most widely purchased property insurance product. Here the owner of a home buys this insurance to safeguard their home and its contents. Many institutions have made buying home insurance mandatory for home-loan seekers. This is a standard property insurance product where features vary from institution to institution.

• Insurance for Tenants (Renter’s Insurance)

This insurance covers the personal items of a tenant in a rented home. The items covered in the insurance include electronic appliances, furniture, etc. The homeowner may include additional liabilities too.

• Insurance of Commercial Property

This may be purchased by commercial establishments such as like factories, shops, offices, etc. It acts as a safeguard for these properties against any damages to the property or its contents.

• Fire Insurance

If your property (residential /commercial) catches fire and its contents are burnt to ashes what will you do? Fire insurance covers the losses you incur. This accidental insurance of property is quite exhaustive and covers a range of properties from homes, to hospitals, factories, etc. Keep in mind, the contents of the property are also covered. You may insure the contents or goods in a factory, the equipment, raw materials and finished or semi-finished goods, etc.

• Insurance against Natural Calamity

This is a special type of property insurance as the regular ones may or may not cover natural disasters like earthquakes, Tsunamis, floods, and so on. The 2015 earthquake in Nepal brought the economy of the country to its knees given the mass destruction it brought about. Any such disaster can destroy your property. This insurance will protect you from any losses from such damages. Many institutions cover natural calamities as an additional feature of their standard policy.

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• Insurance against Burglary

This insurance covers any theft or burglary at your home concerning cash, jewelry, documents, etc. The condition is that these valuables must be locked in a steel almirah. However such policies cover damages limited to the insured amount. When opting for this insurance make sure that you evaluate your valuables correctly. It may be noted that if there are cases of burglary in shops, the policy will cover the damages only if the keys or their duplicate are handed over to the thieves under threat of life.

Before purchasing property insurance, you must research what is being offered by the different financial institutions since their coverage may vary and so also the price.

Amongst the many benefits of property insurance, the most critical is that your financial loss as a result of damages may be recovered fully or partially.  You spend a fortune when buying a home. Protect your financial interests with an insurance cover when availing of a home loan or otherwise.