Importance of Home Insurance, Benefits In India

Your home is the most precious asset that provides a sense of protection and security. Yet, we insure our cars but not our homes. Many people think what’s the worst could happen? They fell taking home insurance is a waste of money as it is a certain investment for an uncertain cause. Well, government records show India is a flood-prone country in the World. Much of India is vulnerable to devastating man-made and natural calamities, putting 200 million people in more than 100 cities at risk. So, it is good to take up a little expense to avoid a huge financial setback in the future. Having home insurance can liberate you from the financial ruin of losing your biggest, lovable asset for as little as five rupees a day. Read on for a better understanding of the Importance of Home Insurance, Benefits in India…

What is home insurance?

Home insurance is also known as Home Loan Protection Plan helps with covering loss or damage caused to your home due to accidents, natural calamities or perils. It is classified into two types– basic fire insurance policy and a comprehensive policy. The fire insurance policy covers your house against fire, lightning, storm, floods or riots. While, HPP on the other hand packs in more covers – one covering the structure of the building against fire, perils and the second covering the contents of the house. Besides, it also provides optional covers, insuring contents of your house against damage, burglary, mechanical or electrical breakdown. 

Benefits of a Home Loan Insurance

It protects you from natural disasters

Natural disasters are every homeowner’s nightmare. However, planning detailed home insurance covers you during natural calamities like floods, earthquakes, and landslides for a minimal monthly or yearly expense. 

The protection is not just for your home

An extensive home insurance policy covers all the components in your compound like your garage, deck, shed, fence, etc. Also, you can opt for add-ons like your furniture and valuable home appliances. 

It offers a replacement for your loss

Getting your home insured provides you with financial security with the added benefit of replacing your insured belongings. 

Not expensive

The home insurance policy might look like an unwanted expense, but the benefits offered by the scheme are much more than money can buy. For example an insured amount of Rs 40 Lakhs of the building, you can get a home insurance policy worth Rs 2,000 per year. 

It protects you from lawsuits

Based on the type of policy you have opted for, your home insurance policy will cover you during the unfortunate incidents. Equally, it will also cover the medical expenses of a guest injured on your property. 

It provides you peace of mind

Finally, getting your home insured provides you with the ultimate luxury of peace of mind. Whether you own an independent villa or an apartment – once you have selected your housing policy and paid your premium, safeguarding your property is no longer your responsibility. 

What is Home Insurance Policy eligibility?

Well, home insurance eligibility varies according to service providers. The minimum age is 18 years. While the topmost age of the borrower while getting the home loan insurance is 50 to 60 years.

Is Home Insurance mandatory for home loans?

It is not mandatory to buy a home protection plan. Neither, the law nor the regulatory bodies such as the Indian Regulatory and Development Authority of India (IRDAI) and Reserve Bank of India (RBI) have made it compulsory under the home loan protection plan. Getting an insurance policy is the only responsibility of the buyer as it offers extra safety to their property. So is not compulsory.

Which are the good homeowner’s insurance policies?

It is mandatory, before availing a home loan insurance policy; you must contact at least three to four banks or housing loan finance companies to compare coverage. 

• To ease your selection check the premium and coverage
• Check claim settlement ratio
• Look at the company’s reputation

Exclusions in Home Insurance include

• Loss of cash
• Loss of damage caused by wear and tear and depreciation
• Loss of damage caused by nuclear war
• Loss caused by war, invasion, the act of the foreign country

How does a home loan insurance work?

Home loan insurance is a plan that covers a borrower’s outstanding loan liability to protect the risk of loss in case the person dies during the loan repayment term. These policies offer a covering that reduces every year, as the loan amount reduces. 

How to file for a home insurance claim?

The insurance policy is held in the name of the borrower of the home loan. In the case of the death of the borrower, the family members of the beneficiary need to file to receive the claimed amount. Once, the claim is approved, the amount is directly paid to the lender/family member of the beneficiary. 

The premium for the Home Insurance

The premium of home loan insurance normally depends on three major categories – loan tenure, age of the borrower, loan amount, health record of the borrower, etc. 

Is there any availability of tax benefits?

If the premium is paid by the borrower himself or herself then he or she is eligible for tax deduction under section 80C and section 10(10D). 

Major points to keep in mind while insuring your home

• You must maintain proof of all your insured items to claim them. 
• Remember unauthorized construction cannot be claimed, so make your investment wisely.
• The home insurance plan is valid only for the building and its components. It doesn’t include the land.
• Occupants can insure the contents of the house they are living in. 
• At the time of policy renewal, get a quote of the reconstruction cost from a contractor for extensive coverage.

Finally, wrapping it up!

Home insurance policy is an important precautionary measure that you must invest in. All you need to take care of a few measures while buying home insurance so that the policy can be effective…