Sometimes, buying insurance seems an afterthought. You end up insuring your life and your vehicles, but that’s as far as our understanding of insurance goes. Insuring your home? Not many of us do that. Homes are often hardly insured. Most of us would rather invest the money and use it to make extensions or repairs to the property when required rather than pay premiums.
Just as there are different types of homes, there are varied types of home insurance companies that offer coverage for a home against specific damages and calamities. Home insurance is also needed even if you are renting a property, especially if you have valuables at home.
Standard essentials a home insurance policy should cover:
Structure coverage - As the price of real estate has skyrocketed and purchasing a house is one of the biggest financial investments in life, it makes sense to spend a little more to keep the house safe from damage.
The home owners’ insurance policy should pay to repair or reconstruct a home if it is destroyed by unpredictable disasters like fire, hail and lightning. But typically, most insurers do not cover damage by natural disasters like flood, earthquake, and regular wear and tear.
Personal belongings coverage - A suitable home insurance policy is one that provides complete coverage to the house structure and valuables in the house.
To cover expensive personal belongings like jewellery, electronic equipment, art or antique objects, the insurer will carry out an appraisal of the objects that you want covered. After estimating the value of house and personal belongings, the insurer will decide the home insurance premium that will cover the cost of replacement in case of damage.
Protection against specific liabilities - The home insurance coverage is based on size and market value of the house, which covers the house against specific dangers.
The specific liabilities cover protects you against lawsuits for physical injuries or damages that have been caused to outsiders on your property. This liability protection clause can lead to a substantial increase in the insurance premium. So, you have to decide if this is necessary depending on the size of the property.
Alternative accommodation - In case the house is not fit for living due to damage from insured disasters and is undergoing repairs, then the insurer should pay for additional living expenses that are incurred by the home owner for living in alternate accommodation.
The additional living expenses or (ALE) coverage is available for extra premium and covers bills for stay and food at the alternate location. But this coverage on insurance policy has certain limits and is separate from the amount allotted for rebuilding or repairing the house.
While buying a home insurance policy make it a point to understand the details of each cover that is specified and the amount that will be given in the case of damage so that the insurance company can justify the insurance premium that has been fixed for the house.
