With an ongoing augmentation of the climate crisis, we have become prone to catastrophic events more than ever before. Natural calamities today have a heightened probability of occurrence and man-made disasters add to this destruction of life and property. According to a Global Climate Risk Index Report, India is amongst the top 15 most vulnerable countries in the world when it comes to being affected by disasters. Floods result in the costliest of property damage, with around 40 million hectares of land in India being exposed to this calamity as per the National Disaster Management Authority.
By such means, your most valued investment – your home – becomes susceptible to this risk as much as your lives. This is where Property Insurance, especially Home Insurance, comes into the picture in order to mitigate the financial crisis resulting from the loss and damage.
Understanding home insurance
Home Insurance is a tool to provide financial security to your residential property in the wake of destruction caused by a natural disaster, man-made disasters or other specific hazardous events. This policy acts as a form of a safety net for house owners as well as tenants, as it prevents you from major financial setbacks that can result from unfortunate catastrophes.
Why must you opt for a home insurance plan?
Massive time, effort and financial investments are required to purchase and/or build a dream home. Your home becomes your most important possession. It is only fair to secure the property in case of any damage due to unforeseen events like natural disasters, accidents, burglary or fires. Home insurance provides you with sensible coverage to alleviate such burdens. Some home insurance policies also cover temporary living expenses, including the cost of rent for temporary rehabilitation, for the duration of any renovation that the property is undergoing. Your personal belongings which are present inside the property are also eligible for an insurance cover in case of damage or loss. If a guest, any third party or you incur injuries, some home insurance policies will also cover the same. All of these reasons make home insurance a viable option for you to financially secure your home.
Calculation of home insurance cost
Before choosing a home insurance plan, you must do your homework leading to home insurance calculation. Let’s understand the various methods used to calculate home insurance.
Calculation method used
Many consumers assume that the amount of home insurance coverage is equal to the amount paid for the house by them. However, there are actually three ways of calculating your home insurance coverage amount. These three methods are: (1) Market Value Method (2) Replacement Value Method and the (3) Fixed Value Method. Let us examine in detail what each of these methods are:
- Market Value Method: Simply put, Market Value method is this: the insurance provider will pay you the cost of the house and/or its articles, as it was when you initially purchased it. Depreciation will also be factored into the mix.
- Replacement Value Method: This method accounts for the cost it will take to rebuild the house with the same structural aspects at today’s market value. For instance, Bajaj Allianz Home Insurance available on Finserv MARKETS calculates the value of your home structure using the Replacement Value Method. The formal to calculate the value of home insurance using this method is Sum Insured = Built-Up Area x Cost of Construction per sq. ft.
- Fixed Value Method: The Fixed Value Method refers to a fixed value or a predetermined sum of money that you can claim if your house undergoes damages. Market prices or depreciation is not taken into account in this method.
Finding a suitable home insurance coverage
To understand the best home insurance coverage plan that caters to your need, decide whether you would want to insure your Home Building, or Household Articles, or both. Insurance coverage plans also vary for different types of users – landlords, house owners and tenants. You must compare many home insurance plans before reaching a conclusion in order to find the most suitable plan in accordance with your financial budget and your rationale behind the coverage. Online forums and discourse with existing customers of different home insurance providers can help you make the right decision for you and your loved ones. Choose Bajaj Allianz Home Insurance available on Finserv MARKETS for extensive coverage at affordable premiums and to financially secure your property today.
Once you have landed upon a specific home insurance coverage plan and method, it’s time to understand the calculation of affordable home insurance premiums.
Source: Bank Bazaar
Important factors affecting home insurance premium
The calculation of home insurance premiums is based on a variety of factors. The type of homeownership, rented or owned, impacts the home insurance premium. The location of the property also affects this cost. The construction value of the property is taken into consideration, too. Apart from these three factors, it is significant to note that the Household articles and belongings including jewelry will impact the home insurance premium cost. Additionally, at times the duration of the policy also factors into the calculation of your home insurance premiums.
You must try to incorporate preventive measures to be prepared in case of a disaster. Smoke detectors, security systems, etc. can help you reduce your premium cost. An in-depth comparison between various plans available in the market will help you to make an informed decision and help you avail comprehensive coverage at low costs. Availing discounts on the home insurance premium is also an option that you must discuss with your insurer. If you think you may require add-on covers that might not be a part of the main insurance policy, do not hesitate to subscribe to those as well.
You can consider opting for an insurance policy with Bajaj Allianz Home Insurance on Finserv MARKETS, a trusted financial partner. Quickly receive the insurance policy without any tedious paperwork and get extensive home insurance coverage at affordable premiums. Secure your home, your most treasured asset, with a tailor-made home insurance plan today.
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