home insurance policy

How a Home Insurance Policy Offers Protection against Disasters

Vikas and Rashmi Dubey loved every square inch of their new detached house in their home town of Bhopal, and they decorated it with the latest gadgets and trendiest furnishings. The bank did offer them a home insurance policy along with the home loan but they had declined it. After the 2019 monsoon havoc in Madhya Pradesh, however, they are rueing that decision every single moment. Severe water-logging in their locality resulted in water entering their house destroying their flooring, electrical appliances and other furniture costing up to a whopping Rs 12 lakh. The Dubeys could have ensured protection against this disaster but they didn’t.

As landslides, floods, and fire destroy our homes, we are reminded of the vulnerability of our homes and other belongings. If not the monsoon, then the country’s susceptibility to earthquakes or other extreme weather conditions should alert us about our disaster preparedness. The government has time and again tried to create awareness about disaster management and preparedness, but on our level, there is the need to take some concrete step so that we are not left emotionally or financially beaten in the event of either a natural or man-made calamity.

We may not be able to disaster-proof ourselves completely when it comes to nature’s fury or any other calamity but what we can do is control the financial impact. Once hit, the worst part is rebuilding and resuming our lives after losing years of progress and savings. Hence, the protection against disasters lies in Home Insurance Policy.

Why Should You Invest in Home Insurance?

For many Indians, their homes are their biggest asset and thus, it becomes crucial to insure it against any untoward happenings. This is a critical and essential factor in disaster preparedness, as it covers not only the house structure but also contents within such as appliances, artefacts, furniture, jewellery, etc. Thus, a home insurance policy covers not only the physical precinct but every valuable thing that resides inside.

There are two types of cover that home insurance policies typically offer:

  • Home insurance of building structure, which also includes permanent fixtures and built-in objects.
  • Home insurance of household items, which includes furniture, household appliances, and even jewellery.

Home insurance policy protection coverage ranges from natural calamities like earthquake, flood, hurricanes, etc. to disaster risks such as war, riots, thefts, arson, etc. Thus, it can compensate for your losses even when the damages are sustained from factors that are unpredictable and could have dented your savings instead. The compensation from home insurance claims can be suitably directed towards repairing and rebuilding, and even in restocking your belongings.

The most advantageous thing about home insurance is its affordability. Home insurance policies can be of single-year duration or run for multiple years with a one-time premium payment. A standard policy costs around Rs 5,000 and covers losses of up to Rs 40 lakh. Now, depending on the coverage sought and the items to be included under insurance, one can choose the best policy on offer from various institutions.

A standard householder policy consists of around ten sections, which covers various risks and hazards, ranging from fire, earthquake, and floods to loss of baggage. Generally, the cover against fire and related damages is obligatory, while you have the option to choose from other sections. Make sure to check and understand which specific covers you’re opting for. Otherwise, you could be in for a surprise when despite having a policy your insurer denies you cover because your case falls under a section you didn’t opt for. For example, a case of theft may not be covered unless you opt for a section called ‘burglary and housebreaking including larceny and theft’.

Besides seeking to cover property against fire and calamities like earthquake, some policies may also include some personal difficulty or liability covers. So for instance, some insurance policies cover the cost of living in a rented home when your house is undergoing repair. Similarly, a landlords’ policy may also allow you to take cover against the loss of rent, if your property has been struck by a disaster, making it unliveable. Remember these are short-term covers that last only for a few months after the disaster.

Points to Check before Buying Home Insurance

The major roadblock for home insurance remains the lack of awareness about this product. Therefore, even when availed, a lot of people are unaware of the features that should be checked before buying one. Here, are some basic facts to be kept in mind before opting for a home insurance policy:

  • Home insurance against natural disasters cannot be availed as a standalone policy in India rather it is an included coverage that is featured in policies of home insurance.
  • Most home insurances policies carry an exclusion article that rules out certain disasters while others are included. Remember to check, and if required, include or exclude provisions in consultation with the insurance provider.
  • Home insurance policies do not by default cover home-operated small businesses and will not offer compensation related to that area in case of losses. It is important to point and incorporate additions during the paperwork.
  • During policy renewal, ensure that the sum insured reflects current market value and is, therefore, increased accordingly.
  • Ensure that your home insurance is comprehensive in nature so that it covers not only the physical construction but also major household appliances, furniture, etc.
  • Decide the policy tenure wisely and based on your unique conditions determine if yearly insurance or long-term multi-year cover suits you better. The former has the advantage of revising the sum insured while the latter has the advantage of lucrative discounts and lower premiums.

Also, when it comes to buying a home insurance policy, you should be careful about who you’re buying it from. The Insurance Regulatory and Development Authority of India (IRDAI) offers some tips in this regard. Check them out here.

Given the geographical and climactic standing of the country, it is surprising to note that home insurance remains largely ignored. This is still unbelievable in the face of the fact that home insurance policies against natural disaster in India are the cheapest among countries with similar economies. The more we insure properties, the better the recovery and also the lesser becomes national loss estimates in the event of a calamity.

Do not wait for something to happen before exercising the wisdom of acquiring a home insurance policy; it is always preferable to have a back-up in case of a disaster rather than waiting for relief measures from the government. The ability to rebuild lives becomes much better with home insurance policies. Get your protection against disasters today!

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