Protecting your dream home and its contents from natural disasters and other perils has become crucial and should be the top priority. Securing your most important asset i.e., home during the turbulent times has become need of hour as it adds to the unfortunate financial burden. Common perils like flood, earthquake etc. can shatter your and your family’s peace and put you in heavy financial losses. You should protect such unfortunate losses which are far away from human control & arising out of natural disasters by purchasing a “Home insurance policy” which is available with much coverage which fully protects your home and ensures complete peace of mind.
Cost of insurance coverage is not only the factor that one should consider while purchasing Home Insurance policy, but there are various areas where your need & priority changes. When, you try to understand your need while purchasing the policy you are left nothing but confused. So to reduce these ambiguities, let give a look on things to look while purchasing home insurance policy.
Coverage (Mandatory and optional): Wide range of coverage sections are available in home insurance policies you should look and opt for coverages you need most. Better coverage may cost you more but choosing the same will help your out-of-pocket expenses at the time of unfortunate event. Some of important coverages under a home insurance product are Fire and allied perils, Burglary and theft, All risk (Jewelry and watches), Plate Glass, Breakdown of domestic appliances, electronic equipment, personal accident, baggage cover, employee compensation, Public liability, additional expenses of rent for alternative accommodation, loss of rent, repair costs etc.
Sum Insured (Building and contents): For selecting the Sum insured for your building you should first estimate the rebuilding cost of building (The rebuilding cost is the cost for the physical house & not the land). The sum insured for building and permanent furniture, fixtures and fittings and electrical/mechanical/electronic machines/ gadgets should be equal to reinstatement value.
Reinstatement Value: It represents the replacement value of the asset as new at time of Damage or Loss. The basis for sum insured for household goods other than electrical, mechanical and electronic machines/gadgets under this Policy is the market value. Market value for household goods means the Procurement value of goods from the same or similar source at the time of damage or Loss less appropriate depreciation. You need to ensure that sum insured is adequately fixed for insured building and contents to avoid under insurance average deductions at the time of claim.
First Loss basis: If you think that all of your contents cannot be damaged or lost in any adverse incidents which is the general case you should purchase a home insurance policy with contents insured on first loss basis. Here, insurer will not penalize you for under insurance in case of claim. You can save money by insuring contents on first loss basis.
Deductibles: Generally, sections covered under home insurance policies have a deductible which you need to bear from your pocket for each & every claim. It is to avoid small claims to trigger. You need to check that deductibles should be not very high and select a product which is affordable from the deductible context. Higher the deductible lesser the cost of the policy & vice-a-versa.
Price: Select a home insurance product which offers maximum necessary coverages at a minimum premium. Covers which you feel not important can be opted out. While, choosing insurance policy for home insurance you must check for the flexibility offered by insurance companies to select coverages as per your requirement and affordability. For example, if you live in a house with less glass fitting than plate glass cover may be opted out.
Discounts: Safety measures taken to mitigate the losses from the customers side calls for discounts while opting for home insurance policy. You can get discounts if you have already installed fire alarms, sprinklers, burglary alarm, CCTV cameras, smoke detectors and other safety measures making your home resistant to disasters. Discounts offered vary from product to products & insurance company to company. You should check with your insurance company, your insurance company will help you understand the best ways for you.
Exclusions: Home insurance policies provides protection against the most of common losses, but the cost of such insurance may go high if all kind of losses get covered in the insurance policies without any exclusions. Hence, home insurance policies comes with certain set of exclusions one should be aware before concluding the sale. Customers should pay attention to all exclusions under the home insurance policy to avoid confusion and denial of claim. In each covered section you will find a list of what all is excluded. Specially one should look for exclusions under All Risk (Jewelry and Valuables) section as any damage other than what is specifically excluded is covered under the policy. Also pay heed to general exclusion like war and nuclear risks, consequential losses, willful misconduct, pollution etc.
Declarations: Be sure about declarations you make under your home insurance policy regarding occupancy, other businesses in the premises, address etc. This forms the basis of the contract and further claim may be denied and policy becomes null and void in case of any misrepresentation and non-disclosure.
No claim discount: If no any claim is made in your home insurance policy for the annual period you are eligible for no claim discount at the time of renewal of the policy which will help reduce the renewal premium to certain extent.
General Conditions: Do not forget to check the general condition about claim notification, documents required, alteration of risk and others. Check if there is any warranty which you need to fulfill throughout the policy term. Like, for burglary claim FIR with police needs to be filed in a time limit. Being clear with all the conditions will help you at the time of distress.
Ease of purchase and service: Online policies are available from almost all insurers. It is easy to purchase home insurance policy and sales process is hassle free. Always, call customer care of the Insurance Company in case of any ambiguity and check the service parameters of the Insurance Company. Always, look for an insurance company which is ready to extend help and fulfill its promise with excellent service delivery.
Claim Process: The claims settlement record of the insurer should be looked upon. This is for what you pay the premium and should get satisfied that Insurance Company will honor your claims in time. Further, before claiming you should be well aware of what all things are covered & what exclusions are as it would not value claiming on the things not covered in your home insurance policy. You should maintain bills of valuable purchases covered in the policy, maintain proper inventory of contents covered & key possessions. Finally, fill the claim form completely avoiding any error for easy evaluation to Insurance Company.