Home Insurance Meaning
At the end of a long hard day, for most of us, our home is a sanctuary from the usual hustle and bustle we’re used to. And yet, your home is vulnerable to all sorts of factors. This is where a home insurance policy comes in. While your home protects you from the noise and chaos of the world, a home insurance policy protects your home.
What does home insurance cover?
1. Natural Disasters
A report from Down To Earth has shown that the frequency of flooding in India has gone up – and will continue to rise – due to climate change. Houses are the foremost casualty in such natural disasters. A home insurance coverage comes in handy in such times.
2. Man-Made Disasters
A leaky gas cylinder combined with an inflammable house item can produce a house fire. The number of reported fire outbreaks in residential buildings saw a 100% rise from 2014 to 2015.
Burglaries can result in the loss of your valuable household items. In 2017, more than Rs. 2065 crore worth of valuables were stolen from residential properties. An even more terrifying statistic is the fact that every 3 minutes, burglary, robbery or break-in is taking place. Home Insurance plans can be tweaked to extend protection to the physical assets present in your house.
4. Fallen trees
Home insurance covers the damages caused by fallen trees. Fallen trees are common during dust storms – and a Pacific Standard report has written that dust storms will get “frequent and more severe” in India due to climate change.
Apart from the aforementioned points, home insurance provides coverage for a vast number of other situations as well.
How does home insurance coverage work?
1. Coverage for Structure
Home insurance will financially protect you against any damage incurred to the physical structure of your home. Structural coverage will generally include damages to apparatus inside your home, such as plumbing, heating, air-conditioning, as well.
2. Coverage of Personal Property
The factors discussed above – flooding, fires – can damage both the structure of a house – the roof, the floor, the walls – as well as the valuable items inside your house. Therefore, it is essential to opt for a home insurance policy that will help reimburse the costs of repairing/replacing such items. Bajaj Allianz Home Insurance, available on Finserv MARKETS, provides all the above protections and more. Bajaj Allianz Home Insurance, available here on Finserv MARKETS, therefore offers a plan where you can insure the structure of the house as well as the items inside it.
Home Insurance Calculation
In the unfortunate event of total damage to your house, some home insurance policies offer one of the following three payouts:
1. Replacement Cost: Replacement cost is the cost of replacing – at current market value – the structure and goods that have been destroyed. This payout option is, therefore, variable – the prevailing market prices determine the insurance amount that is due to you.
2. Market Value: Market value is the actual value at which your house was bought. Market value payouts take into account the actual value of your house after years of depreciation. Depreciation is the regular wear and tear that every asset goes through after usage.
3. Fixed Value Replacement cost: With this option, you can claim a fixed value if your house is destroyed. This option fixes a value when the insurance kicks into force – and this value is independent of the market price or depreciation rates.
What are the factors that affect home insurance premium?
The premium for your home insurance depends on three things:
While buying home insurance, each buyer has to contend with the tradeoff between premiums and coverage. You can choose to insure only the structure or your house, your household articles or both. Coverage for both the structure as well as household articles comes with slightly higher premiums – but also gives you tremendous peace of mind. From the perspective of financial security, it is generally better to opt for a plan that offers all-round protection for the policyholder.
b. Cost of Construction
A home insurance policy provides the funds to reconstruct your home in case it gets damaged. Therefore, the initial cost of constructing your home plays a role in determining your premium. The higher the cost of construction, the greater will be the premium. It is important to do a correct valuation of your house – overestimating the cost of construction will give you a greater payout if something happens to your house, but it will also raise the cost of your premiums.
c. Policy Tenure
A policy spread across 30 years will be cheaper than a policy with a length of 10 years. Therefore, it is always good to start early. Starting early makes your home insurance premiums affordable and lets you enjoy the peace of mind of an insurance policy for far longer.
Which home insurance policy can you opt for?
Bajaj Allianz Home Insurance, available on Finserv MARKETS, is customizable to your needs. With help of home insurance calculator now you can calculate your home insurance premium online. You can choose between three types of plans available for homeowners, tenants and for landlords. You can choose to either insure only the structure of your house, just the items within your house or both! You can avail a sum insured of up to Rs. 10 Crore at nominal premiums. With minimal documentation, the process to avail Bajaj Allianz Home Insurance on Finserv MARKETS is truly hassle-free.
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