For most of us, there is no bigger matter of pride than owning a home. However, while everybody dreams of possessing a beautiful house, fact is, building one is often not within the realm of a person’s normal earnings. Getting to the desired level of satisfaction to make the house a home, complete with every last need and want, may sometimes take years. While we often put our life’s savings into buying that home, we rarely realize that our home needs protection in the form of insurance too.
Home Insurance Policies
Today, the market offers various home insurance package policies that cover major risks associated with home and its contents against perils such as fire, theft, burglaries, floods, earthquake and other natural calamities. The various perils covered under these policies not only include natural calamities, but also risks like riots, strikes and other malicious damage. Under these plans, along with the structure of the home, contents such as jewelry, furniture, fragile items, and electronic & portable items are also insured against the aforementioned perils, including damage to electrical equipments due to electrical or mechanical breakdown.
However, a typical householder or fire insurance policy comes with a limitation that it reimburses only the cost of construction of the house in case of damage to the structure. Imagine a scenario wherein you own a flat worth Rs. 1 crore in Hyderabad, with a construction cost of Rs. 50 lakh. In case the city is hit by a natural calamity, such as an earthquake, it may cause extensive damage to your property. In such a situation, the home insurance policy will reimburse only Rs. 50 lakh, which is the cost of construction of your home. This acts as a drawback, especially for individuals living in multistoried apartments, as it becomes difficult for them to exercise their ownership rights in case a building collapses. Besides they might have to wait or incur cost for an alternate accommodation till the entire building is restored or repaired.
Low Penetration of Home Insurrance Policy
Given the fact that home insurance is an important financial tool to safeguard ones earnings and savings that they may have invested in building a home, its penetration in India is still less than 1 percent. This is much less when compared to motor or health insurance in the country. To understand the reason behind this trend, Bajaj Allianz General Insurance conducted a survey, thereby also finding out the requirement of the market and expectations of the customers, when it comes to buying a suitable home insurance cover.
It was observed that the prime reason for low penetration of home insurance was lack of awareness, along with difficulty of understanding and buying such products, despite their availability in the market. Also, the consumers were looking for a cover which not only protects their home at the right value, but also provides a wider security blanket for the contents at a reasonable price. In line with the customer’s requirements, an easy to understand and innovative comprehensive all risk home insurance policy was designed, that not only covers all major risks associated with a home and its contents, but also ensures ease of transaction.
This home insurance plan allows customers to insure their property at an ‘agreed value or market value basis’, which means that in case of a loss, the insurance company will compensate not just the cost of structure but the market price of the property. However, the option of insuring the property at its cost of construction is also provided. Reiterating the aforementioned example, incase of a damage to your property, this policy shall pay you Rs. 1 crore, the market value of the house enabling you to reinstate the lost asset or buy a new home in a similar locality. Besides, in case of an unforeseen event that makes the home inhabitable, the policy takes care of the expenses incurred towards additional cost for rent, thereby reducing the financial burden for a person.
Another feature of the policy is that it offers coverage for any kind of accidental damage to household equipment at the time of shifting within the house for equipments, jewelery, curios, works of art and portable items. Also, unlike the cover provided by the existing policies for damaged contents, this policy provides the insured with the option of replacing the old contents with new ones. The premium for this policy might also differ from the existing plans available in the market.
Everyone, these days, are spending exorbitant amounts of money on building their home, and must safeguard that hard earned money invested in creating a safe haven, by means of a good home insurance policy. Visit our website to know more about home insurance policies and invest in home insurance policy today.
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