What You Must Know About Home Insurance!

Importance of Home Insurance

Building  a house is often seen as a major life achievement, but many people do not insure their homes. Those who take bank or government loans for building a house are required to take home insurance, but this usually lasts only until the loan is repaid.

Lack of Awareness

Even those  who have taken home insurance policies are often unaware of the terms and conditions. Here’s what you need to know and do to ensure you are adequately protected.

Dream Home

Prakash, a  school teacher, bought a house and took out a home insurance policy for it. However, when a geyser in his bathroom overheated, causing a fire that destroyed half of his belongings, he discovered that his policy did not cover this accident.

Insurance Policy

Prakash  was shocked to learn that his policy did not include benefits for such incidents, despite his agent having assured him that it covered natural disasters, fire, and theft. 

Know Your Policy

From this, it is clear that you must fully understand the pros and cons of your home insurance policy. Always review all the terms and conditions before signing your policy.

Coverage for Damages

Once you have a home insurance policy, the company guarantees coverage for your building and its contents. Damages caused by human error or natural disasters will be considered.

Natural Disasters

Most policies cover damages from natural disasters like cyclones, floods, lightning, and storms. They also cover damages caused by human actions such as fire, airplane crashes, riots, strikes, and missile testing accidents.

Earthquakes

Insurance for losses due to earthquakes is usually not included but can be added by paying an additional premium. The same applies to coverage for theft and burglary.

Theft and Burglary

Insurance for theft and burglary typically covers jewelry and valuable gemstones only if they are stored in a secure locker.

Exclusions

It is crucial to understand what is not included in your home insurance policy. 

Depreciation

You should be aware that your property's value decreases annually due to various factors, and you cannot claim insurance for this depreciation.

Electrical and Electronic Devices

Insurance companies do not provide coverage for fires caused by overuse of electrical and electronic devices, which is why Prakash’s claim was denied. Additionally, while theft coverage is available, it does not cover stolen cash.

War

If your property is damaged due to a military operation or war, the insurance company will not take responsibility.

Property Coverage

Home insurance is based on the cost of constructing the building, not the land value or the total value of the property.

Conclusion

So, when you take out home insurance, be sure to consider all these factors before signing the policy.