We have often heard of people buying home insurance and later finding out the home insurance coverage did not protect what they wanted to be kept safe. For many, home insurance is definitely not the first cover on their list. But it’s an important safety net or backup if things go haywire or if you face any difficult situations.
Home ownership is a big milestone in a person’s life. Considering the times we are in, taking all the care to protect your home might still not be enough to fight unforeseen situations. As a homeowner, you need to know all the risks involved and how to adequately fight them.
Buying home insurance works like any other insurance. You need to know and stay informed about the critical questions you must ask before buying it. Don’t think twice before asking questions you deem uncommon or silly. Asking more questions give you a better understanding of what you’re in for.
To understand how much coverage you will get from your insurance policy, you must understand one concept crystal clear. A home isn’t just any structure. It includes every item that you acquired as a homeowner, many of which are extremely valuable and expensive. So to find out how much coverage you need, evaluating everything in the house is extremely important.
Source: BusinessToday.In
Getting Started
When you are starting to choose a home insurance policy, never take the insurance provider’s word at face value. The coverage might not be as comprehensive as they make it out to be. Maybe your water tank caused a leak in your apartment. Safe to assume you’re covered, right? You might not be. You must understand the policy’s basic elements before getting into the specifics of what it promises. Typical home insurance coverage includes 10 sections as depicted in the image above, covering risks from fire, natural disasters, or loss of baggage. Usually, fire and allied sections are a given with options to choose other sections and pay higher premiums for it. The more options you choose, the broader your cover becomes. If your house help steals something, you are only covered if you include the section ‘housebreaking including larceny and theft.’ So despite having the best home insurance policy, without that section, your insurance provider denies coverage.
Performing Your Own Coverage Estimate
When starting out in choosing a home insurance policy for yourself, you need to do your own coverage estimate. It’s a lot of research work to put down your costs and risks in numbers. You need to calculate all the probable costs to insure your home by addressing various questions about your house, property, and geographical risks. This would be probable rebuilding costs in the next few years, geographical risks such as natural disasters or fire propensity posed as a threat to your home, and the total value of all personal assets within the house. Understanding these costs and risks can help you find out the minimum thresholds you need for underlying sections to make up the best home insurance policy for yourself.
Personal Possessions & Assets
Home insurance coverage usually includes the costs of personal possessions and assets. But a specified limit of coverage exists in every home insurance policy, which is anywhere between 50-70% of home insurance amount. You need to put down a list of all items in your home whereby you evaluate the value of each listed item. The contents in the list should be detailed and segregated as per electronic appliances, clothing, furniture, valuables. You should also include costs needed for a replacement if it gets damaged, destroyed, or stolen. You can choose between policies that provide full cash value for stolen or destroyed goods or just replacement costs, the former will have more expensive premiums. A broad package can cover all kinds of losses from various situations like theft of jewellery, damage to electronic appliances in a party or an unexpected short-circuit. If you are looking into buying a new home insurance policy, check out the comprehensive package available on Bajaj Markets. Their policy covers all your valuable possessions from jewellery to art displays on prior consent.
Alternate Accommodation
An important feature of a home insurance policy is covering any costs towards alternate or extra accommodation. This is in cases of your original house getting damaged by a fire or natural disaster. It is extremely important to have such protection if you purchased a new house on a loan to save rent costs and unfortunate incidence deems your house unlivable. Not only do you need to repay the loan but pay extra rent costs for alternate accommodation. This is a very complicated financial situation for a homeowner. Home insurance coverage should include everything from meals, rents, and other living costs you might need to pay for. This feature also applies to part of your houses rented to other tenants that were damaged by an insured cause. In that case, coverage includes the rent amount you lose out on that were to be paid by the tenant. As a homeowner, having the best home insurance policy would be one that puts you in the same financial position before the incident happened. Keep a tab of probable rent and living expenses in case such a situation arises and you can accordingly determine the ideal coverage for yourself. Most policies cover this but if you are considering switching your provider for a comprehensive plan, the insurance policy available on Bajaj Markets is a great option. They offer additional benefits for covering living expenses for temporary resettlements as well as loss from rent.
Liability To Others
Most often legal liabilities involve any bodily injury or damage to your property or damage caused by you or your family. Home insurance coverage includes the costs of such liabilities that you must pay in court. So, this is expert advice – you should choose a higher sum to cover costs when such liabilities arise, even if you would be required to pay higher premiums. If you choose a higher sum, you get a more comprehensive home insurance package to meet all your financial needs. If your current policy does not cover these legal liabilities enough, consider the home insurance policy available on Bajaj Markets. It has a comprehensive package covering several legal liabilities as well as add-ons, ranging from protection during travel to covering security and kitchen appliances.
Find Out The Replacement Costs of Your Home
Replacement costs are basically the amount you need to build a new house if it gets destroyed. It is different from the resale value by being lower or higher than sale value based on the location of the property. Calculating the exact cost is complex so insurance providers combine public data and information you provide to find out the replacement cost for you. Insurance providers also inspect your new insured property to confirm if the coverage level you choose will be what you need. This is helpful for you and the company to make sure you are getting charged the right price.
First, come up with the average cost to build your home per square foot and then multiply it by the square foot area of your home. These costs may vary across states. Second, contact local suppliers after to calculate the costs of major areas of your home such as exteriors, roofs, flooring, special features, bathrooms, and rooms. Third, add the replacement costs of assets in your house mentioned previously.
Rebuilding or Renovating Costs of Your Property
Over the past few years, construction costs have risen substantially since the last time you built or renovated your house. And they are continuing to rise. Often, rebuilding costs are equated to the selling cost of your house. So if you choose to rebuild your house, many factors are involved here. These are local construction costs, exterior materials, number of bathrooms and rooms, roof materials, custom-built areas, improved alterations to add to house value or special features like fireplaces or arched windows. When finding out the ideal coverage for yourself, you need to understand the rebuilding costs and possible price rises in the future to buy the best home insurance.
A great choice for a comprehensive home insurance policy is one available on Bajaj Markets. They have a long list of coverage features. Their comprehensive coverage covers multiple facets under one umbrella. They also offer multiple plan types based on your requirements with different coverage options to choose from. You can even choose from covering either your property alone, your contents only, or both. Their plan can go on for a period of 5 years, which is an especially critical period when you first move into your home. You can also choose from their variety of add-on benefits that won’t pinch your wallet too much.
It’s evidently clear now that finding the ideal coverage for your home insurance policy is a long and tedious task. It requires a lot of research, contacts, and putting down the value of your property and assets into numbers. But once you have a solid list with replacement and costs for both, you can determine how much home insurance coverage you need. A more comprehensive package will cost you a lot in premiums, for sure. But overall, you know you have kept yourself financially secure if disaster strikes. The best home insurance policy for you is one that keeps you financially afloat, whether it’s partial or full coverage. You will be able to navigate your way out of it easily and without having to use your precious savings.
