This should serve as a warning sign for the need to have adequate safeguards for your house
Home insurance is an under-purchased product in India. This is in spite of the fact that there has been a significant surge in the number of home buyers in the country over the past few years. There is an apprehension that home insurance policy comes with high premiums and complex processes. However the reality is that people lack sufficient information about the product. Given the uncertain times we live in, home insurance is the need of the hour.
Here are several reasons why purchasing a home insurance policy is a must.
To recover from natural and man-made disasters: A home insurance policy provides financial protection in case your house is damaged due to natural or man-made calamities like floods, earthquakes, fires or vandalism. For instance, floods in Chennai, cyclone in Andhra Pradesh and cloudburst in Uttarakhand caused massive destruction. This should serve as a warning sign for the need to have adequate safeguards for your house.
Compensates for the loss/ damage to your assets and personal belongings : Home insurance covers not just the structure of your house but also the personal belongings. This includes jewelry, electronic appliances, furniture, luxury and antique items etc. Thus in case of burglary or accidental damage, you can rest assured that you have a back up plan.
Covers temporary living expenses : Your home insurance policy will take care of the expenses if you need to rent another house or move into a hotel temporarily, until your home is repaired/ rebuilt. This will help you to be independent and recover from any eventuality.
Provides aid in availing home loan from financial institutions: Some banks have a pre-requisite of providing home loan only if your house is insured. In fact, home insurance is a preliminary requirement to be eligible for a home loan in a lot of cases.
Premiums for home insurance for a sum assured of Rs 10 lakh for 10 years could be as low as Rs 2,400 for a structure only cover. Depending on the items in the house that are covered premiums will slightly vary.
To conclude, home insurance is an important precautionary measure that you should definitely invest in. Make sure that you are not under insured, by declaring the value of assets accurately so as to derive the right sum insured figure.
Also it is important to understand the terms and conditions of a home insurance policy and ensure that you check the policy every three to five years as the cost of reconstructing a house is bound to appreciate, due to inflation. If you keep these points in mind, you will not think twice before opting for your home insurance policy.
The writer is head product development, SBI General Insurance
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