Returning to the comfort of our home is probably one of the most relatable sentiments we can all share and appreciate. Your home is the most expensive and precious asset of all, not only because of the financial aspect but also because so many of your emotions are invested in that one home. This is why understanding home insurance is so important and evaluating the pros and cons of home insurance before making your decision is a real necessity.
Understanding home insurance:
On a very basic level, you avail of home insurance to safeguard your property against physical and financial liabilities. Nowadays home insurance packages are tailored to cater to the specific requirement of the home owners. Here are a few pointers to help you understand these requirements:
1. Insurance can be for only the building (structure) of your home, or only the contents (belongings) or both.
2. You will receive a complete coverage against financial liabilities arising from the damage/loss of your home and/or its contents due to natural or man-made reasons.
3. Additional covers like Burglary and Theft Cover for the contents in your property are also available.
4. Another feature is additional expenses of rent for alternative accommodation. If you are forced to shift into an alternative accommodation because your home is destroyed or damaged by any insured peril, the insurance will cover your rent.
5. Besides this, financial institutes also provide home loan protection plans. The insurance company settles any outstanding amount on the home loan with the bank/lender in the event of death of the borrower. The policy term is usually the same as the loan tenure. This way, a borrower can ensure that his/her family will not have to vacate the house due to non-repayment of home loan after demise of the borrower.
As per a survey by Bajaj Allianz, 64 per cent of homeowners felt earthquakes and other natural calamities were the biggest risks their homes were exposed to, followed by fire (28 per cent) and thefts and burglaries (8 per cent).Yet, according to Business Standard, home insurance penetration in the country is a mere 0.07%, this means that 99.93% of the population is willing to leave an important asset unprotected.
What most homeowners need to understand is that in the event of a calamity that could leave you financially crippled, insurance will become your precious backup.
Most people in India won’t commit to insurance because it is not considered a necessity. The Tribune also pointed out that willing Indians are intimidated by the vague nature of home insurance. The fact that the penetration of general insurance industry in India was 0.78 per cent of GDP in 2014 and has barely increased since then does not help either.
It is important to realize that you cannot leave your home at the mercy of fate, because it could potentially be an act of god that wrecks your home. Home insurance will also safeguard your family from financial trouble and displacement. Face the legal aspects of home insurance head on, do your research, consider your options and take one of the most important decisions of your life. Get your home insured.