Wealth Guide: What you need to know about home insurance and why it’s necessary - Expert explains

Contrary to common belief that home insurance is a luxury, people have started considering it a necessity. Up until a few years back home insurance was not a very widespread concept, only a chunk of people would take this very crucial step of getting their homes insured against natural calamities as well as man-borne threats. Jasmeet Sing Suri, Sr. Vice President (Sales, CRM & Marketing), Empire Centrum, shares his knowledge on home insurance, its important details and why it’s necessary.

"Home insurance covers all kinds of damages on the property and protects the owners against sudden losses occurred due to an array of threats like burglary, loss of valuable possessions and catastrophes like flood, earthquake or even fire. Home insurance covers are mostly comprehensive policies that provide all-round protection to the house and pay for all kinds of expenditures in an emergency situation. The market is full of different types of home insurance policies, each has varied cover mandates and works differently. In ideal situations, home insurance should be bought by home buyers at the time of purchase of the property. Most insurance policies require the buyer to purchase a plan that covers at least 80% of the replacement cost of the property, some even need the buyers to have a limit that covers 100% of the cost, this situation usually occurs with high-value home where along with the property the assets are also covered under the policy," Jasmeet Sing Suri explains.

He further adds, "Much to your astonishment, the premium of most home insurance policies is quite affordable. For example, the insurance cost of a property worth Rs 50 lakh would approximately be around Rs 2500 per year. Even the most comprehensive policies that cover all the components of the house can go only up to Rs 5000. Mostly the factors that drive the value of your home insurance are the worth of the property and the assets. Sometimes the location of the house can also influence the type of coverage. For example, if the house is in close vicinity to the sea, the insurance policies already cover the electronic appliances, similarly if the house is situated in a calamity prone region that is affected by earthquake or floods or lava eruption, the policies include cover for structure as well as content damage."

"For beginners, there are standard home insurance policies that include— dwelling coverage including protection for the structure like ceiling, walls and floor, it also covers damage caused by common factors like fire, theft or vandalism; content coverage including protection of the assets like furniture and appliances, in case of any damage to these items the insurance holder gets the price mentioned in his policy for these items. Some insurance policies also cover the home-dwellers under personal liability so if the residents or even the guests undergo any physical injury due to the damage of the house, the cost is covered," he further said.

"In addition to this, there are optional insurance coverages that provide protection from chosen threats like flood, earthquake, etc. In most situations the buyers get an option to customize the policy as per the requirement so it’s imperative for buyers to attain full information about the area and the property before settling on a home insurance policy. Most people believe that home insurance is a waste of money because it’s confirmed expenditure for an indefinite cause but they fail to understand that by paying a small amount of money regularly they can avert huge financial losses. By purchasing a home insurance, an individual gets himself financial security as well as peace of mind because along with the structure of the property he is able to protect all his belongings including the prized possessions," he advised.

"So regardless of what you own — an apartment, a bungalow or a holiday abode, home insurance is a must," he concluded.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)