The A to Z of Home Insurance

When the tsunami hit the coastal towns of Tamilnadu, there was huge destruction to property. Many houses, villages and even towns were wiped out. The same thing happened in the USA when Hurricane Katrina wreaked havoc in New Orleans and when Japan was hit with a double whammy of a tsunami and nuclear spillage.
In all cases, insurance companies had said that they were inundated with claims.
So just what were the claims that the insurance companies received?

Why Home Insurance?

A home of one’s own is a cherished dream that most people have. A house is probably the most expensive asset and possession that one will have in their lifetime. We see that amongst the first (and biggest) loan that a person takes from a bank is a Home Loan and spends almost 15 to 20 years paying it back.
A house becomes and home and emotions, sentiments and lives get entwined into it. Families are house-proud and make their home as pretty and elegant as possible – filling it with beautiful furniture, white goods and even painting it regularly.
But wait! Does a family really care about the house in the long run?
The answer seems to be a no-brainer, right. Of course, they do.
What if someone told a person that they don’t really care about their homes or the huge amount of money that they have invested into the house?
The fact is: People don’t seem to really take care of their most expensive and prized possession for a simple reason: they don’t take Home Insurance.

What is Home Insurance?

Like Life Insurance safeguards a person against any unforeseen calamities, Home Insurance safeguards the house against unforeseen calamities. A house is vulnerable to theft, fire and even natural calamities like cyclones and earthquakes. A Home Insurance protects the home and the money tied into the house against all these possibilities.

How Does a Home Insurance Work?

A Home Insurance works exactly like a Life Insurance. In Life Insurance, a person’s age and health are taken into consideration; a term is fixed and a premium is decided. Similarly, in Home Insurance, the person who is insuring their house chooses all the types of threats that they want to guard against and all the articles of their home that they want to safeguard. They decide the term of insurance and then the insurer calculates the premium amount.
Again, like in Life Insurance, the premiums must be paid periodically for the entire term of the insurance.

When Should One Get Home Insurance?

When a person buys a new car, they usually take a Car Insurance along with it because the perception is that a moving vehicle is prone to accidents. This means that there will be repairs coming up, and an insurance will reduce or nullify the cost of the repairs. It makes sense to them.
On the other hand, a house is fixed in a place and seems less susceptible. However, it is equally important to keep your home protected.
Consider the threats to a home which exist from the minute you own the house:

• Vulnerability to man-made disasters: Thieves strike anytime. They don’t particularly care whether the house is new or old. This threat exists from the minute there are any possessions in the house.
• Vulnerabilities to natural disasters: Several areas in India are prone to being afflicted by cyclones, floods and earthquakes. Not such a long time back, Chennai was affected by floods. Coastal Andhra, West Bengal and Tamilnadu are exposed to the vagaries of the sea. The Brahmaputra is unpredictable, at best. Many areas in India face the possibility of floods in the monsoons. Every year, Delhi experiences mild tremors at least a couple of times. The devastating effect of the earthquake in Gujarat is still fresh.
  This means that it is best to insure the house as soon as possible.

Additional Benefits of Home Insurance

• Low Premiums: Like the home owners, the insurers also consider that the likelihood of damage to the home is low. Therefore, the cost of Home Insurance is quite low. For example, if a house is worth Rs. 1 crore, the premium could be as low as Rs.5000.
• Tax Benefits: Business owners can deduct their home insurance premium from the taxable income at the time of filing income tax returns.
• If the property was purchased on loan and something unforeseen happens to it during the loan repayment tenure, then reimbursement will minimise losses to a certain extent.
• Optional Add-ons: The home owner can avail optional cover for terrorism and additional expenses for rent for alternate accommodation, in case of emergency. Additionally, one can choose to add coverage for valuable personal property kept inside the insured premise, such as jewellery or any other valuables.
  Given all these facts, a Home Insurance makes perfect sense.