What does Home Insurance Cover?
Home Insurance is one of the most important insurance policies that a homeowner should opt for. It provides a wide range of coverage against risks of damage and theft. The knowledge about Home Insurance among homeowners is not very high. If you are wondering how Home Insurance works, this guide is perfect for you.
What risks does Home Insurance cover?
Home Insurance covers a variety of risks. Broadly, the risks can be categorized as loss or damage to the structure and loss or damage to the contents. They can be further classified as:
- Loss or Damage to the structure because of:
- Lightning, storm, cyclone, hurricane, tornado
- Missile testing
- Aircraft damage
- Strike, riots
- Landslide, inundations,
- Leakage from sprinklers, bursting and overflowing of water tanks
- Loss or Damage to the contents because of:
There are a few exclusions to a Home Insurance policy:
- Loss or damage because of the insured’s domestic help, even if the domestic help is directly or indirectly involved in the actual or attempted burglary or theft
- Wilful destruction
- Losses because the house was unoccupied for a certain period of time (30 or 60 days)
- Cash, bullion, works of art
- Electrical and mechanical breakdown
Each policy has a list of exclusions which should be considered before buying the Home Insurance policy.
How much should I insure my house for?
The cost of the house is insured based on a concept called ‘Reinstatement Value’. This means the cost of reconstructing your house as it currently is. Market rates are not considered for this purpose which may make you wonder how Home Insurance works, but the cost of construction also considers the location of the property.
Some insurance companies also consider the cost of the house on agreed value basis. This is calculated based on total area of the house mentioned in the registered sale agreement multiplied by the value per square foot as per the Government’s Ready Reckoner.
There is a third way to calculate the value of the house called Indemnity Basis. Under this, the cost found out as per Reinstatement value is reduced by the depreciation on the flat. Needless to say, this method of calculation does not benefit the homeowner and he must pick a policy that does not use this method.
The insured value for the cost of contents shall be based on the replacement value for the items insured. It is the duty of the insured to make a thorough and exhaustive list of items that have to be insured. However, the coverage for jewellery will depend on each insurance company and their offerings.
How can I make a claim?
This is the most important part of the insurance policy. Most insurers have a defined process for raising a claim. Once any damage occurs to the property, the insured should immediately inform the insurance company. The insurance company will send a surveyor to the site to assess the damage. Once the surveyor files a site report, the insured will have to submit documents supporting the claim to the insurance company. The insurance company will process the documents and the claim will be approved or rejected as the case may be.
A Home Insurance is one of the best decisions you can take for your property. Be sure to insure your home today.
Read more on how you can protect your home from Natural Disasters.
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* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. All information is subject to the relevant Act, Rules, Regulations, Policy Statements, etc, of the respective insurance provider and subject to change. Viewers are advised to verify the content before applying for the insurance.