Tuesday, November 12, 2013

Facts About Home Insurance In India

Home insurance, also referred to homeowners’ insurance, provides a cover against risks related to property. Currently, about 1% of the homes in India are insured. But this number is increasing as more people realise the importance of getting their home insured.

Listed hereunder, are 7 facts about home insurance in India which one must know.

1) There Are Two Types Of Home Insurance Policy Available In India

In India there are mainly two types of home insurance available-
Building Insurance: An insurance which covers only the value of the structure of the home against natural and man-made disasters is called building insurance.
Content Insurance: An insurance which covers the value of the household goods is content insurance. The value is calculated on the market price.
You can choose one of both of these policies together.
Another thing to note is that a building over the age of 50 is not insured in India.

2) The Home Insurance Policy Covers The Natural And Man-made Disasters, Both

Fire, Lightning, Storm, Earthquake, Flood, Aircraft damage, Riot, Explosion / implosion, Bursting and/or overflowing of water tanks and pipes, and Terrorism Damage are covered by both the insurance policies.
Burglary cover is also provided in case of the contents being insured. Loss of jewellery, silver articles, and precious stones are also covered.
Additional expenses of rent for alternative accommodation and Terrorism Cover are optional covers which can be added to the policy.

3) There Are Few Segments Which Are Not Included In The Home Insurance Policy

The insurance is not provided against-
Willful destruction of the property
Works of art, antiques, and other collectibles
Loss to property due to war
Damages to the property due to wear and tear

4) There Might Be Some Hidden Charges Associated With The Home Insurance policy

There are a few charges which are deducted from the amount you deposit. Some of them are the allocation fees and administrative charges.
Often, the buyer is not told about them. Make sure you enquire about these charges and the deductions applicable well in advance, so that you know the exact amount that you are paying as part of the premium every month.

5) The Lock In Period And Surrender Charges Of The Policy Is Generally Not Told About

The lock in period is the mandatory period for which the amount must stay invested with the company in order to derive any benefits. If any investor withdraws his money before the end of this period, interest rates as high as 4% might have to be paid.
A charge has to be paid to the insurance company if the policy is surrendered before its maturity. This surrender charge is usually fixed.
In most cases, the companies do not inform the buyer about the lock in period or the surrender charges. You should enquire about both of these before the purchasing the policy.

6) The Home Insurance Policy Can Be Purchased Online

Almost all of the home insurance policies available in India can be purchased online. However, you must read the fine print carefully before finalising.

7) Many Terms And Conditions Are Associated With The Home Insurance Policy

There might be various other terms and conditions associated to the policy that you are buying. Be sure to read the policy related document carefully before investing.
These were the facts about home insurance in India. Insuring your home will give you a financial security for a long period of time at affordable costs.

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