All You Need to Know Before Buying A Home Insurance Policy
As the decision to purchase a home involves financial liabilities, putting some safety caution in place would help in future. Insuring your home against various natural and other calamities is one such step.
Before you pick a policy, there are a number of questions you should ask yourself: Does the policy meet your requirements? Are you covered adequately? Will the policy enhance the value of your property in India? Here is what you need to know before you decide to buy a homeowners insurance policy:
What is a home insurance policy?
According to sector watchdog, the Insurance Regulatory and Development Authority of India (IRDAI) , "insurance of property means insurance of buildings, machinery, stocks, etc, against fire and allied perils, burglary risks, and so on". Home insurance falls under property insurance, which again is a category of the general insurance.
The types of home insurance
The insurance market is full of various schemes. There are umbrella policies, which provide a combination of covers under one document. Such policies, apart from seeking to cover property, may also include certain personal lines or liability covers. The most popular home insurance policy is the fire insurance policy. Apart from the risk of fire, this policy, according to IRDAI, also offers cover against “lightning, explosion, aircraft damage, riot, strike and malicious damage, storm, cyclone, typhoon, hurricane, flood and inundation, impact damage, landslide, bursting or overflowing of water tanks, apparatus and pipes, accidental leakage from automatic sprinkler installations, etc”. Most home buyers and property owners go for this policy. However, this policy does not cover loss caused by “war and warlike operations, nuclear perils, pollution or contamination, electrical/mechanical breakdown, burglary and housebreaking”, according to the IRDAI website.
A burglary insurance policy covers your property contained in the premises. It also covers cash, valuables, and securities.
The right fit
Now, before choosing an insurance policy, you need to understand what suits you the best. For instance, if your home is in a flood-prone area, your insurance must cover damages that might be caused in case of a flood. Going for a fire insurance policy in this case would be the best for you. Also, choosing a plan with a low coverage could cut down the amount of your monthly premiums, but it could prove to be a costly affair in the long run. Also, check what kind of tax benefits a policy can provide you.
Background check
Do your research before buying a home insurance policy. A decision to buy a policy should not be solely based on offers and discounts a company might be offering. Competitive rates do not necessarily make a policy the perfect fit for you. To get the best deal, also compare different companies and their offerings. There are online forums that may help you understand the claim settlement ratio of various companies.
The fine print
Read policy papers carefully. A company agent might try to sell a policy explaining mostly the advantages. However, it may or may not include all the clauses of a policy. Any errors, even minor ones, must be brought to the notice of the agent immediately and rectified.
What else?