Buying or building your own home is no mean task. It involves your time and money, especially a lot of money, which you would have toiled night and day to accumulate. You might even have availed of a home loan to supplement your savings so that you can buy your own home. Repaying the loan also involves significant outflows and that too for longer periods of time. After the effort and finance that you put into owning a home, what if your home suffers damage and is destroyed? Would you have the funds necessary to face the loss and rebuild your home?
Fire, earthquakes, floods, cyclones, etc. have become a common occurrence and these perils pose a serious threat to your home. If any of these perils occur, your home is damaged and you face a financial loss. To compensate for this possible loss, a home insurance policy becomes relevant. The policy covers these perils which might damage your home and compensate for the financial loss that you suffer when your home is damaged. A home insurance policy, therefore, becomes quite important for the coverage that it provides. In a home insurance policy, there are different components of coverage.
Here are the top five components which you should ensure are there in your home insurance policy before you buy it –
Structure and content cover
Structure cover covers the structure of your home like the roof, walls, etc. from common perils like fire, flood, earthquake, storm, cyclone, etc. If the structure of the home is damaged due to any of the covered perils, the policy would pay the cost of rebuilding it.
Content cover, on the other hand, means coverage for the contents of the home. Contents include home appliances, furniture, fittings, personal belongings of the insured which are kept at the home, jewelry, etc.
Home insurance policies offer coverage for only the structure of the home, only the contents of the home, or for both. If coverage for both contents and structure is taken, it is called a package policy. A package policy is recommended for your home as it provides all-inclusive coverage.
Fire and allied perils
Every home insurance policy provides coverage against damage by fire and allied perils. Fire and allied perils include coverage for damages caused due to the following perils –
- Natural calamities like a volcanic eruptions, lightning, fire, bush or forest fire, storms, floods, etc.
- Implosion or explosion
- Aircraft damage
- Riots, strikes, civil unrest, and malicious damage
- Impact damage
- Landslide or rockslide
- Overflow of water tanks or bursting of tanks
- Leaking of automatic sprinklers
- Missile testing operations
If the home suffers damage from any of these perils, the loss suffered would be paid by the insurance policy.
Under this cover, loss of the contents of the home due to burglary or theft is covered. Burglary insurance coverage is often inbuilt into the coverage for the contents of the home. You should, however, check the scope of coverage of the policy to ensure that burglary cover is available under the plan.
Public Liability cover
Under public liability cover, the policy covers the liability faced by the homeowner in case of physical injury or property damage suffered by another individual. If another individual suffers any physical injury inside the premises of the insured home or loss of property due to the insured home, the homeowner might become financially liable for the loss caused to the third party. A home insurance policy would pay for such losses too. Common examples include an individual slipping and falling in the insured home which fractures the individual’s leg. The home insurance policy would pay for the medical costs incurred in treating the fracture. Similarly, if a part of the insured home breaks and lands on another individual’s property and damages it, the policy would cover the costs of rebuilding the third party’s property which was damaged.
Under this cover, any loss suffered by the house and/or its contents due to terrorist activities are covered. Terrorism cover might be inbuilt into the policy or can be taken as an extension of the basic policy by paying an additional premium.
These are the five of the most important coverage aspects which you should have in your home insurance plan. Besides these aspects, home insurance policies also offer coverage extensions that enhance the scope of coverage of the plan. Some common extensions available include the following –
- Rent for alternate accommodation when the damaged home is undergoing repairs
- Loss of rent for the period the home is undergoing repairs after a claim
- Loss of cash from home
- Personal accident
- Cover for portable electronic equipment
- Coverage for pedal cycle
- Key and lock replacement costs
- Cover against robbery in case of ATM withdrawals
- Dog insurance cover
- Employees’ compensation cover, etc.
When buying a home insurance policy you can select the coverage aspects and the premium would be determined accordingly. The top five coverage benefits are a must after which you can select the required extensions by paying a nominal additional premium.
So, know the coverage of a home insurance plan so that you can opt for a plan which offers the most comprehensive coverage against risks faced by your dream home.