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Everyone has goals that they hope to accomplish one day, and some of these goals are common amongst many people. In fact, one of the most common goals that people share owns their own home. People often look forward to buying their families or themselves a nice new home to settle down in. Or maybe you have already started paying off the mortgage of a place. In any case, some of us often wonder about the values behind home insurance. In reality, when it comes to homeowners insurance, a lot of questions come to mind.

The main question is, do you actually need home insurance? Majority of the time, your home is going to be one of your most valuable assets. This means you want to be able to protect that asset in the best way possible. With homeowners insurance, you will have the proper help with protecting that precious investment in more ways than one.

Every natural disaster leaves behind a massive trail of huge destruction to life and property. Chennai floods claimed a total loss of over 9,500 crores or the 2013 North India floods that reported a loss of 15,000 crores. Although the government does its best to provide economic help to the people during a natural disaster like Kerela floods, proper financial planning certainly lowers the financial burden.

Home Loan and Insurance

In many cases, a homeowner is required to have some form of homeowners insurance. Especially in some cases in regards to loans or mortgage, lenders are more than likely going to require that you have homeowners insurance. Essentially, mortgage companies are going to ask you to provide proof that your home is insured properly. This is done mainly before any funding is done toward your mortgage or any refinancing. Lenders often want to make sure that their financial investment is going to be protected. Just in case anything is destroyed, damaged, or any other concerning risk factors. If you ever need help finding the right policy, you can refer to local agents for extra assistance.

What does Home Insurance Cover?

A standard homeowner’s policy typically covers any physical aspects of your home and even offers a home warranty.From personal belongings to medical bills for any injury, there are a few things that this will cover.

Any Additional Expenses

Think about different scenarios, maybe your home has caught fire or maybe the house suffered from flooding. This is where your homeowner’s insurance will come into the picture. Any temporary increased living costs will be covered for you. So if you have to stay at a hotel until things have subsided, you won’t have to worry about those expenses.

Coverage For You And Your Family

There may come a time where you or a family member will be legally responsible for any variation of an accident. It could be damaging the property or even accidentally injuring someone. Legal fees, medical bill, and repair costs can all be covered with the help of insurance.

Guest Coverage

While it may not be the first thing that you think would happen, but a guest of your home could get hurt. A lot of policies will offer guest medical protection clauses, which can be useful if any visitor gets hurt in your home accidentally.

Vital For Personal Property

One of the most important needs for many people is to ensure that their personal belongings will be safe. Certain personal properties like electronics will be paid for in order to replace them if they are damaged or even stolen.

Home Insurance Coverage Cost

The home insurance coverage cost is decided based on all or some of the following parameters.

  • Building/Contents or BothThe home insurance coverage will depend on if you are insuring the building only or the contents only or both.
    • If you select building only, the value of the home structure will be taken into consideration. The value of the building is the reconstruction cost and not the market value of the property. Optimum coverage should adequately compensate for the rebuilding cost. To find the building value, the built-up area of property and the construction rate per square feet will be multiplied. For example, if the built-up area of your home is 1200 sq.ft and the construction cost is Rs.1,500 per sq.ft, the sum insured for the building structure will be Rs.18,00,000.
    • For contents, the value of personal belongings and jewellery will be considered.
    • For a plan that encompasses a comprehensive cover for both contents and building, the value of both building and contents will be added.
  • Value of Contents and JewellryWhile calculating the home insurance coverage costs, you must also specify the value of contents and jewellery. The insurance must be able to sufficiently cover the costs of replacement.

How to Calculate Home Insurance Premium?

The premium of Home Insurance is calculated based on the following.

  • Type of home ownership – if it is rented or owned.
  • The sum insured which is calculated based on the built-up area and construction cost
  • The cost of contents and belongings including jewellery
  • Add-on covers opted like terrorism cover or all-risk jewellery cover.

Exclusions to any home insurance policy

It is important that you carefully review your insurance policy wordings to find out exactly what kinds of perils your policy does protect you against and what it doesn’t cover. Do also remember, that the policy will have specific limits coverage of items like jewellery, silverware, securities, money, etc. Some of the most common exclusions to a home insurance policy are as follows:

Most home insurance policies do not cover animals, birds, and fishes.

Any loss of damage caused due to surface water, flooding or water backed up through drains /sewers.

  • Any physical damage or bodily injury resulting from an intentional act of the insured.
  • Movements of the earth.
  • War, nuclear damage, etc.
  • Business property & automobiles.
  • Any loss or damage caused due to the operation/ownership/ use of an automobile, aircraft, watercraft and recreational motor vehicle with a motor capacity exceeding 50 Horsepower.

In conclusion, only insuring your home is not sufficient – you must insure it for the right amount of coverage so that you don’t have to burn a hole in your pocket in case of an unexpected mishap. Keep in mind that having a home insurance policy isn’t guaranteed to prevent any damages from happening. While that may not be the case, it will help you in the financial area in case anything unexpected happen. You must think about all of the possible things that can happen, a storm may hit, or any other crisis could present itself. If you can’t cover any damages, then it’ll be nice to have some help so that you can get your life going again.

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