Every working individual today aspires for a home of their own. No wonder the demand for houses has increased manifold in the past decade. The property market has been giving some good returns too. Add to all this the fact that financial institutions are more than willing to hand out home loans. So, people have realised that homes can be good investments in the long run.

However, the fact is that home insurance is not as popular as homes or home loans for that matter. Home insurance is not considered necessary. However, do you know that a home insurance plan can protect your home against calamities, theft, fire, burglary and other such mishaps? A home insurance policy is important if you are planning to hold on to that home for a long time.

What is covered?

Based on what cover a home insurance plan offers, they are divided into two types.

a) The plan that covers damage to the structure: As is obvious, the only thing this will cover is the outside of the building. This means that any damage to the building’s structure to various causes as mentioned in the policy document will be covered. You cannot make claims for damage to any items inside your home.  

b) The plan that covers content: These plans help you claim damages for items inside your house. This will include furniture, jewellery and appliances.

You can, of course, get a comprehensive cover that will allow you to claim damages against both. Note that these kinds of comprehensive policies can be availed by only owners of the home and not tenants. If you are a tenant, you could get home insurance for covering the items inside the house.

Just like life insurance and health insurance, home insurance also comes with a number of add-on covers. Some of them are burglary cover, terrorism cover and rent cover. What’s a rent cover? This cover will help you claim rent expenses in case your own home is undergoing repair work and you are forced to stay in a rented accommodation. Terrorism cover will help you claim expenses when your property is damaged due to terrorism. Most home insurance might exclude damage due to terrorism in case of basic home insurance plans.

What is not covered?

There will be many exclusions in a home insurance policy. Some of the most common ones include damage caused because of negligence. Any damages caused wilfully will also be excluded. Didn’t disclose certain facts about your home while taking the policy? Then, those would become exclusions and your claim will be rejected. A part of your building is already damaged? Then, your home insurance might not cover any consequences due to this. Also, note that in case items in your home have manufacturing defects, your home insurance will not cover this. The exclusions differ from one insurer to another. You should check the policy document carefully when you sign up.

How much will it cost you?

Unlike popular perception, home insurance needn’t be expensive always. A lot will depend on the value of your home, the built-up area and the present structure. The sum assured will depend on the value of your property and the premium will depend on the sum assured. The location of the property and the age of the property might also play a role in determining the value of the property.

The premium will also depend on the tenure of the policy and whether it is your own home or a rented home. A comprehensive policy will cost you more than a basic plan. For example, if you want the home insurance plan to cover only the structure, then, the plan might cost you anywhere between Rs 3000 and Rs 7000 if the value of your property is about Rs. 60 lakhs.

If you want to go for a comprehensive plan that covers both the structure and the contents, the premium could be between Rs. 10,000 and Rs 30,000. This is assuming the value of the property is Rs 60 lakh while the value of the items in the house is Rs 10 lakh.

There are many online calculators available for calculating the premium for a home insurance policy. Compare across insurers to get the best plan at the lowest possible cost.

Staff Writer

This article is written by RupeeIQ editorial staff.