Top 5 Misconceptions about Home Insurance

Earthquake tremors come as a reminder to us on how important it is to have home insurance. Still, not many people in India buy home insurance due to a lack of awareness and misconceptions about home insurance.

Three kinds of risks are covered under a home insurance policy.

  • The basic policy protects the building against fire and allied perils such as earthquakes & floods
  • The second type of risk coverage protects the house contents from both natural and man-made calamities, including burglary
  • The third covers peripheral risks such as loss of baggage in transit

The top 5 misconceptions about home insurance are as follow:

Act of God not covered under Home insurance

Lot of people believes that home insurance does not cover acts of God such as earthquake, floods, etc. But the fact is that acts of God are covered under home insurance. Section 1 of a home insurance policy generally covers fire and other allied perils such as floods, while there are overall 10 sections out of which you need to take at least two to three sections. Section 1 is usually compulsory in all the policies. But you need to read the policy document carefully so that you know what exactly is covered.

Home Insurance Tips:

It is advisable to go for a comprehensive home insurance cover to avoid last-minute surprises. Considering that each policy differs in wording, check out with your agent the extent of coverage offered under the policy.

Home insurance is expensive compared to other insurance products

Another misconception about home insurance is its very costly but in reality its cost around 0.25% of overall sum assured, which is less than the motor insurance cost. Ex, the sum insured of Rs 10 lakh and valuables worth Rs 5 lakh, including jewellery, the premium comes to around Rs 2,500. But the fine print is that home insurance generally pays you the cost of construction and not the cost of land. The cost of construction is arrived at by multiplying the carpet area of the house with the cost of construction in that city. A few policies cover the cost of land. One such is “My Home All Risk Policy” from Bajaj Allianz General.

Home Insurance Tips:

Low premiums mean low commissions for agents. So your agent might not be keen to sell the policy. The best is to buy online.

Difficult to get claims on home insurance

Many fear that claim settlement is a lengthy process. It is not so. If you know how to file a claim, you can speed up the claim process. For example, in case of any eventuality, the insured needs to intimate the claim to the local office or to the company’s call centre. The insurance company deploys a surveyor and the claim is settled after the losses are assessed. The insurer asks for your know-your-customer (KYC) documents to identify the claimant but usually in case of large-scale eventualities insurers relax the settlement procedures. At times, insurers just ask for the date and the year when the policy was issued so that they can cross-check it in their database and settle the claim.

Home Insurance Tips:

The best solution is to be aware of the whole claim process in advance so that when the calamity happens you know what to do.

Home insurance taken at time of getting home loan is sufficient

Most home insurance policies bought at the time of taking on a home loan cover the building structure only, without any coverage for contents such as household articles and electrical appliances that can also get damaged during a natural calamity. Such policies mostly cover basic perils such as fire and flood. Only a comprehensive home insurance product covers both structure and contents.

Home Insurance Tips:

The right way to buy home insurance is to have adequate sum insured and proper basis of coverage, including a cover for the home contents. Check with your agent whether the policy covers acts of God and perils such as earthquake.

People leaving on rent can’t buy home insurance

If you have given your house on rent, you can take insurance for the structure as well as for contents. Specific covers are also available in the market. As a tenant also, you can insure the contents of your home. If you move to another place, you can get the policy endorsed for change of address.

Hope above information on top 5 misconceptions about home insurance helps you better understand the home insurance offerings and why it’s an absolute necessary to have one of it.

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