That insurance is a hedge against risks is still not clear to the masses. The possibility to eradicate or reduce the financial risk as a result of loss of life, against illness, theft of your vehicle or belongings at home, against your house being destroyed due to fire or riots or any other things is still not understood by the majority.
Financial literacy has picked up in India in the last decade and people have started becoming aware, but we are still far away compared to the maturity achieved in developed nations.
Consumer movement of the past decade has strengthened and even small homes today are cramped with expensive gadgets.
Is insuring your house an important thing in your financial plan? If it is not, it definitely should be. For the average Joe, the house comprises almost 40-50% of his net worth; even more to many others. Just imagine a natural calamity or a collapse of the building you live in due to some structural problems? Who is responsible to repay you the losses that have occurred? Insuring one’s house against theft, fire, and riots should not be considered a waste of money anymore, as losses far outweigh the nominal premium that such policies demand. Let’s look into the important points needed to be considered before purchasing householders’ insurance.
Scope of Cover
The structure of your house and its contents like personal belongings from financial loss in case of damage or destruction. It covers your precious possessions and can provide you with compensation for liability claims, medical expenses, and other amounts that result from property damage and personal injury suffered by others. Most lenders require you to own householders’ insurance if you apply for a mortgage.
Usually covers against natural calamities, such as fire, lightning, earthquake, landslide, rockslide, flood, inundation, storm, tempest, typhoon, hurricane, tornado, or cyclone also manmade calamities like damage caused by aircrafts, riots, strikes, malicious or terrorist acts, domestic gas explosions, overflow and bursting of water tank or pipes, and other risks covers also.
Personal property like furniture, clothing, electronic gadgetry and outdoor items like sports gear and gardening tools are also included in the coverage. Property insurance protects your home, any structures attached to your dwelling as well as other tools like sheds, indoor pools, etc.
Some policies insure at actual cost of the property while others do it at the replacement cost of such property. Unless the policy specifically states that property is covered for its replacement value, coverage is for actual cash value.
Make a detailed list of all the belongings in your house and preserve it. This should include the quantity details, description, cost and the amount of loss associated with each item. The inventory list must be updated on a regular basis every six months.
Copies of bills, invoices etc should be kept along with the inventory list. If you add any improvements to your house then they should automatically be included in your coverage. Even if the improvements are still in progress, it is better to insure them just in case they are irreparably damaged before they are complete.
The purchase date, serial number and price of all the electronic items should be kept in order for quick verification.
Make sure you include component parts and the contents of drawers, shelves, closets, storage boxes and built-in cabinets. Remember that you may be covered for things that are included in your policy.
When you are selecting an insurance policy, do not go by the amount of premium alone. Get lots of quotes from various companies and then decide. The insurer should not only offer good service but also be known for paying the claims.