Home Insurance

March 6, 2011   ·   0 Comments

Lesson 12:

www.stockssavvy.comOne can find everything he wants to know about Home Insurance. We have covered from the basics on Home Insurance & why this is one of the most neglected types of Insurance?

Home insurance, sometimes also referred as homeowners insurance, provides a cover for house property against hazards. Now a day’s people have been going & opting for home insurance due to the recent spate of natural calamities hitting the normal man like earthquakes, tsunami, floods etc.
The Home insurance gives you peace of mind by protecting your house and valuables for a long period of time. It secures your property from any uncertain future losses. The covered elements include losses to your home, its contents, or loss of other personal possessions of the homeowner.

The home insurance policy is usually a term contract which is for a fixed period of time. Premium is the amount the insured pays to the insurer. If the insured lives in an earthquake zone area then the premium is likely to increase. Therefore the insured must thoroughly go through the terms of contract and insurance agreement details.

The insured is given an option to insure the building structure or opt for the contents or both. Usually, fire, malicious damage, earthquake, explosion, storm, cyclone, landslides, rock slides and burglary are covered. In case of theft, the contents of the home are also covered including loss of jewelry, silver articles and precious stones.
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  • The basic feature of the policy is the protection of the building and its contents from hazards, such as fire, lightning, explosion, terrorist acts and earthquake etc. But this cover does not include valuables (such as jewellery).
  • The second feature includes Protection against burglary and cover for jewellery and other valuables. This cover has to be taken separately, over and above the basic feature by paying additional premium.
  • The other features include protection for breakage of plate glass, baggage loss, and breakdown of domestic appliances /electronic gadgets, such as televisions, VCRs and DVD players as well as a personal accident insurance.

Broadly, the home insurance policy covers the building structure and contents, loss due to burglary/ theft, loss of jewellery or valuables, baggage loss, damage or loss of domestic and electrical appliances, damage to electronic equipments and other belongings like Pedal cycles, etc.

The policy generally covers the structure of your home and contents against

  • Fire, Lightning, Explosion/ Implosion
  • Riot Strike, Malicious and Terrorist Damages
  • Earthquake, Volcanic Eruption & other Convulsions of Nature
  • Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation
  • Bush fire
  • Aircraft damage and Missile testing operations
  • Impact damage by rail/ road vehicle and animal
  • Subsidence and Landslide including Rockslide
  • Bursting and overflowing of water tanks, apparatus, pipes
  • Leakage from automatic sprinklers installations

The usual exclusions are willful destruction of property, any loss or damage to any property that is illegally acquired, kept, stored which is subject to forfeiture, any loss or damage by the insured and/ or insured’s domestic staff direct or indirect involvement in an attempted burglary, any loss caused by war, wear & tear, and/ or If the property was vacant for more than 30 days without prior notice to the company.

Any loss or damage suffered due to the following is treated as an exception and cannot be claimed:

  1. Any loss or damage on account of loss of livestock, motor vehicles, pedal cycles, money, securities for money, stamp, bullion, deeds, bonds, bills of exchange, promissory notes, stock or share certificates, business books, manuscripts, documents of any kinds, unless specifically mentioned and valued.
  2. Consumable articles.
  3. Loose precious stones, jewellery or valuables, unless specifically mentioned and valued.

Therefore, yearly valuation plays a vital role in home insurance to ensure that claim becomes an easier process!

The Premium of home worth about 50 Lac Rs. comes near about 3000 Rs for an year. This varies a lil depending on the company from which one is getting the insurance.

Sum assured of Home is calculated as:

Sum assured= Built up are(Sq. Feet) * Construction Cost(Rs/per sq. Ft.)

There is huge difference when one extends the no. of years on which he needs the Insurance. Let us look at Premium charged by ICICI Lombard for a 45 Lac Rs. Sum assured

No. of Years Premium Paid
1 Year 2,978 Rs.
3 Years 7,818 Rs.
5 Years 11,788 Rs.
10 Years 17,372 Rs.

You must know the difference between the two before going for Home Insurance. Home loan insurance cover is a plan that protects your home loan in case of any unforeseen event happens to the borrower. The Home loan insurance cover is for all those people who are burdened with such worries of paying the EMI of their home loans in their absence. In case of any unforeseen event the dependent family members will be supported by the home loan insurance cover, whereas the Home Insurance covers the house & its contents against various hazards.

Home Insurance is one of the most neglected type of Insurance. But if one compare different regions in India, every region has got its own problems which makes it compulsory to own a Home Insurance. Delhi & Kolkata metro have high crime rate whereas there are lot of Natural Calamities happening in Mumbai in form of Rains, Chennai in form of Floods & Tsunami, Ahmedabad for Earthquakes.

Do you think we missed on something on Health Insurance in this Article. If yes, please let us know. Sharing your Views will be really appreciated.

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Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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