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.
Precautionary Measures
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.
November 18th, 2008 at 4:46 pm
While going forward for this kind of policies one should not forget to get all the inventory valuation. This would form as a great support while in claim along with those bills and other back up which you have stored. The reason for the valuation report is that if it done through the specialist then it will be lesser contestable.
November 18th, 2008 at 5:46 pm
Yes very well said that one should insure the house. We normally take an insurance cover for life, car etc and often forget to insure our house. I think after the July 26th heavy rainfall in Mumbai, house insurance against natural calamities must be considered.
November 19th, 2008 at 1:31 pm
That seems too good to be true, don’t you think?
November 19th, 2008 at 7:19 pm
Last sentence is very important, buy insurance from a company which has a higher claim payout.
I think buying an insurance policy is crucial and from which company to buy is more vital. As there are many parameters you have to compare and then take a call accordingly.
November 19th, 2008 at 7:28 pm
A house for Indians means an emmotional asset for them.
So it is very important, to insure your house.
November 19th, 2008 at 7:31 pm
Every thing having a finacial value should be insured.
The basic requirement to insure a particular asset is, one should have an insurable interest and financial value for the asset.
November 19th, 2008 at 7:42 pm
Does loan cover term insurance work on the same lines. Are House Insurance and loan cover term insurance two different products.
Loan cover term insurance takes care of the housing loan liability. Can you please explain the difference. I am confused.
November 19th, 2008 at 7:47 pm
Hi Jubin,
The Precautionay measures listed out is excellent one should benefit from it. Great article.
Expecting few more articles from your side.
November 19th, 2008 at 7:48 pm
Excellent article to understand and utilize the home loans for tax planning
November 19th, 2008 at 8:42 pm
This is a good piece of information have just renovated my house and it has taken most of my money i always thought that householders policy were meant for protection of building never thought that i can also insure my inventories.
November 20th, 2008 at 12:42 am
I found your article very good. Would advice you to write more articles on insurance and preferably make a comparison between two policies so that it is easier to make decision.
December 17th, 2008 at 4:56 pm
It was a lovely write-up…you went on to explain the need for this plan and why one should have…i think people would stumble on this plan after reading this write-up. Good work!
December 18th, 2008 at 4:16 pm
Oh! come on are you sayiong we can insure each and everything kept in our house…thats a great news…where do you guys get this information from that keeps surprising me….great stuff mate.
December 18th, 2008 at 4:17 pm
Its really interesting to know we have such plan in place that can insurance our household stuff..well written and explained.
December 18th, 2008 at 4:19 pm
Good stufff…..its always good to know new things…i wasn’t aware such plan exist…its always beneficial visiting this blog
December 18th, 2008 at 4:21 pm
now one can go on a vacation without having to worry about any robbery…householders insurance is a blessing
December 18th, 2008 at 4:22 pm
I am sure not man are aware of any such plan and its always good to know such plans exists and their importance.
December 18th, 2008 at 4:58 pm
why not householder’s plan? the author rightly said if we can insure our car..life then why not household stufff…informative stuff.