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Home Insurance for Beginners

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. There are several other factors which are beyond your control. Taking up a home insurance policy is a crucial step towards securing your home. Most of us, don’t realize the importance of taking up a home insurance policy until it’s too late. If you are new to the concept of home insurance, here’s a beginner’s guide to home insurance.

Why is home insurance important?

Coverage Against Natural/Man-Made Disasters
Natural disasters such as floods, cyclones and earthquakes, often cause extensive damage to life and property. A home insurance policy will provide compensation for the loss/damage caused to your home due to such causes. Besides natural disasters, a home insurance policy also provides compensation for damages caused due to manmade hazards such as fire, theft, vandalism etc.
 
Compensation for Temporary Living Expenses
In case your home is deemed inhabitable due to severe damage, a home insurance policy will provide compensation for your temporary living expenses until your home is repaired or rebuilt.
 
Compensation for Damage/Loss of Assets
Besides covering your home structure, a home insurance policy also covers assets such as clothes, ornaments, electronic appliances, furniture etc.

Protection Against Liability
A home insurance policy also protects you against any liability arising out of accidental damage caused by you to a third party member within the confines of your property.

Types of home insurance policies

Building/Structure Insurance
 To buy this type of home insurance policy, you need to be a homeowner. Structural insurance generally covers damage caused to the home structure as well as outdoor structures such as garages, and sheds.
 
Home Contents Insurance 
A home content insurance covers damage/loss of your personal belongings such as clothes, furniture etc. This type of home insurance can be purchased even if you live in a rented space.
 

Home Insurance Valuation

Under home insurance, you will be compensated for damage to your home and property. The amount of claim you receive in case of damage is dependent upon the valuation of your home and assets. You can choose to insure your home based on two types of valuation.
 
Reinstatement Value
If you choose to insure your home on the reinstatement value, only the cost of construction can be recovered while claiming. The construction cost is inclusive of the material cost as well as labour cost.
 
Indemnity Value
If you have insured your house at indemnity value, you can claim the sum insured along with the total premium paid in case of loss and damage to your property. Additionally, the depreciation based on the age of the property will be deducted from the claim amount.
 

Exclusions Under a Home Insurance Policy

Like all insurance policies, home insurance also has certain exclusions. However, this can vary from company to company. 
  • Damage or loss caused due to nuclear activity/radiation
  • Civil war or insurgence
  • Military attack
  • Minor damages caused due to termite infestation, cracks on the wall etc.
  • Intentional damage 
  • Act of terrorism