Things to Know Before Buying a Home Insurance Policy

Buying or building a house is one of the most important decisions people make in their lives. Hence, it is natural to secure your home against any unforeseen damages. In that regard, buying a home insurance policy becomes crucial. Here are things you must consider before buying a home insurance policy.

What is a Home Insurance Policy?

Home insurance is a property insurance policy covering your home and its contents against any loss or damage. The policy is available for both owned and rented property. It covers damage caused by natural calamities or theft, fire, vandalism, etc. The policy secures you financially against any unforeseen damages caused to the property and/or its contents.

Why Should You Buy a Home Insurance Policy?

For most people, buying a house is a significant financial decision. However, as per the Insurance Regulatory and Development Authority of India (IRDAI), only 1% of houses in the country are insured. This shows that many homeowners and renters are exposing themselves to financial risk. Let us take a look at the reasons why you should avail the policy:

• A home insurance policy ensures that you can insure your house and its contents. It lets you have peace of mind knowing that one of your prized possessions is secured against loss/damage.
• The home insurance policy is quite flexible as it can secure the property for a period ranging from 1 day to 5 years.
• You can opt for add-ons to protect the items not covered under the base home insurance policy.
• Both homeowners and tenants can buy the insurance policy to secure the house and its contents.

Things to Know Before Buying a Home Insurance Policy

Before you start looking for the best home insurance policy, here are some key things that you must know:

• The geographical location and the type of house you reside in affects the amount of premium and the coverage offered by the policy. This is because specific kinds of homes and certain locations are more prone to damage.
• When applying for insurance, you must disclose all the relevant information about your house without concealing anything. Your insurer can refuse to settle your claims if they later find that you had not disclosed proper information in the application.
• You can choose to insure just the house, its contents, or both.
• The value of the contents is calculated based on their market price.
• A building structure which is older than 50 years cannot be insured.
• Any loss or damage incurred due to wilful destruction of property, wear and tear, or because of war, is not covered under the home insurance policy.
• Check for hidden costs associated with the insurance policy. Enquire with the insurer about administrative charges and allocation fees before taking the policy.
• While buying a home of your own is on the priority list of many, availing a home insurance policy is not. It can be attributed to the fact that many feel that it is an expensive affair. However, if you research well or consult a financial advisor, you can get the policy at a nominal price.

But before you sign up for the policy, go through the checklist mentioned above and thoroughly understand the terms and conditions of the policy.