As far as financial management is concerned, for most Indians, our biggest and most beloved financial investment is our home. Home is not merely limited to its financial aspect, it is much more than that. For Indians, our home is very close to our hearts; we are emotionally connected. But how many of us consider buying insurance for home? Not much, right?
Buying your own house is one of the foremost priorities and dreams for many people around the globe. Further, as per Business Standard , over 65 percent of Indians look forward to buying a home in 2024. People spent years saving and planning for their homes. After all these efforts, having your home is a big achievement.
But these efforts and aspirations for your house could fail if you do not prepare before the time. Here, the insurance for home comes into play. Home insurance rates in India were around 1 percent six years back , and there are still no many improvements. Meanwhile, it ranges from 90% to 97% in countries like the US, UK, France, and Australia.
Home insurance is one of the most neglected types of insurance. We look towards home insurance as an additional expense rather than considering it a step towards security. Building a house requires a lot of investments, in the form of money as well as time, so you would never want to worry or feel tension about it.
What is Home insurance?
Home insurance is another type of insurance that ensures the safeguarding of the policyholder against any financial crisis due to any event that might cause potential damage to his property. Home insurance also extends its coverage to the belongings and other high-value items the policy buyer might want to ensure against any potential risk. Home insurance provides coverage for events like theft, fire, burglary, or any kind of natural disaster. Depending on your needs, you can add-on coverage for your furniture, valuable appliances, electronics, garage, etc.
What are the Various Types of Home Insurance?
There are broadly three types of home insurance. Depending on your needs, you can choose the best insurance for home. Access your home, items in the home, or any precious item, and then determine the type of home insurance plan best suited for you.
Comprehensive Home Insurance
As the name suggests, comprehensive home insurance provides coverage for the structure of your building, the available items in the house, and the family members living in that house.
Structure Insurance
It is a slightly more economical option. Structural Insurance provides coverage only in case any damage is caused to the structure of your house. Many additional add-ons extend the scope of the policy to provide coverage in situations like theft and terrorist attacks.
Content Insurance
Content insurance provides coverage only to the items of the house. The items like electronics, jewelry, and others are covered, and the amount of coverage depends on the market cost of the damaged or lost items.
What are the reasons to have home insurance?
Buying a insurance for home has many benefits that people must consider. Here are some benefits of home insurance:-
It insures you against any risks that can cause extensive damage
We do try to protect our houses from any theft, fire, or burglary by installing security equipment and safety gadgets, but they can help you to a certain extent. They do provide basic level protection, but that is not enough. Apart from this, there are risks from the natural that we can not control.
Natural disasters like earthquakes, floods, tsunamis, hurricanes, lighting, etc can cause heavy damage. We can not even do much to protect our property against such natural disasters. By having home insurance for property, we can at least minimize the financial loss that could occur because of such events.
Need of Insurance Regardless of Where You Live
It does not matter where you live in home insurance becomes essential for you as maybe the housing society you may live in might not have protection against the act of god(it includes natural disasters). If you are someone living on rent, you might not get anything for the damage to your belongings in case of any fire or burglary.
Affordability
People tend to avoid buying any home insurance policy because they view it as an unnecessary expense. But, by doing this they are saving a small amount by putting a larger value at risk. Home insurance is a safety net you might never need but if some day some misfortune happens and you do not have home insurance, you might find yourself in huge financial trouble.
Protection against any legal action
Home insurance protects you and your family against any legal action regarding your property. It also provides coverage for any kind of medical bill in case someone gets injured on your property.
Peace of mind
When you know your most important asset- your shelter is protected from mishappening- you can freely live your life without any extra stress on you. A home is where people feel relaxed and enjoy their life with their family. So, leave concerns regarding your house in the hands of your home insurance.
It helps rebuild your life
Losing your house because of an event would be a hard setback for anyone. In such a situation, home insurance can provide you with capital to help you rebuild your life again.
Home insurance for landlords
Even if you have shifted to your new house and rented your old one to earn some extra bucks, you should have home insurance to cover your old house. You need not be required to live in the house to have the benefits of home insurance. If someone is living on rent in your house, you can still have coverage for any damage caused by any internal or external factor to your home. Natural disasters might not harm you if you are not living in that house, but your house is also a financial investment. That is why home insurance becomes essential for everyone to safeguard their properties against unforeseen natural events.
Home insurance for renters
Home also becomes essential for anyone living on rent as even if they do not have possession of the property they line in as they have their belongings in that property. Any damage to the property might not directly impact the person living on rent, but the damage caused to his belongings and items of high value can put a lot of financial pressure on his pocket.
Other Benefits of Insurance for Home
Apart from these benefits, buying home insurance also provides some tax benefits. Depending on your tax slab, you have different limits for claims.
Some benefits of renter’s home insurance:
- It recovers the cost of loss due to damage to your belongings.
- You get liability coverage benefits that you can use in case of any legal action.
- It is very affordable in comparison to other home insurance policies.
Is Insurance Compulsory for a Home Loan?
Now, you might ask about the importance of property insurance for home loans or is property insurance mandatory for home loans. It is a very common misconception that home insurance is mandatory for home loans. No government authority had made such a rule. The bank officials might try to sell you insurance along with the loan, but it is optional for an individual to take home insurance along with a home loan.
Home insurance is a vital part of everyone’s financial part as a house requires a lot of investment in money, time, and emotions. So, you would never want to risk one of the biggest investments of your life. You should do thorough market research to choose a policy that provides maximum benefits at the lowest cost.