Home is a place synonymous with safety, comfort, freedom and love that are rare to find in the outside world. For most homeowners, it is one of their life’s greatest investments as well. Home is the place where you would like to keep your most precious memories and belongings so that you can revisit them as and when you want.
Despite all these good feelings, happiness and investments attached to it, the house will still be vulnerable to natural disasters, theft, fire, etc. Although, it is advisable that you take precautionary measures to avoid these accidents, but precaution alone is not sufficient. Earthquakes, burglary, fire, etc. are certain dangers that are not only unpredictable but can also cause great damage to the property or the contents inside your home.
The emotional loss from such disasters may not be recovered but the financial losses can at least be covered through a ‘home insurance policy’. Home Insurance policy allows you to replace your home assets without paying all the expenses from your pocket.
What Losses are covered by Home Insurance Policy?
Home insurance policies in general will cover any or all of the following:
- Structure of the home
- Contents in the home
Policy can be taken for either both of the above or anyone. When home insurance policy covers both contents and structure, it is called ‘Comprehensive Home Insurance Policy’. For new homeowners, a comprehensive homeowners’ policy is advisable.
Which Accidents Are Covered under Home Insurance Policy?
Insurance will cover losses caused by events that are uncertain in nature and rare to occur. For ease of understanding, insurance firms publish a list of events that may cause damage to property or contents of the house.
Following are some common events covered under homeowners’ policy:
- Impact Damage
- Aircraft Damage
- Explosion/ Implosion
- Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation
- Riot, Strike, Malicious Damage
- Subsidence and Landslide including Rockslide
- Bursting and/or overflowing of water tanks, apparatus and pipes
- Missile testing operations
- Leakage from automatic sprinkler installations
- Bush Fire
- Burglary and theft
Some optional covers may also be bought depending on the insurer’s conditions:
- Terrorism Cover
- Rent Expenses for alternative accommodation
Can a Tenant Buy Homeowner’s Policy?
Yes, a tenant can also buy homeowner’s policy despite paying only rent for the property. Only, a tenant’s homeowner policy will not insure the structure of the house. The building itself can only be insured against any damage by the owner, while a tenant can insure the contents inside (again, only the contents which are owned by the tenant).
What is not Covered by Home Insurance Policy?
Similar to any other insurance policy, any self-damage (deliberate damages), damage to cash and antiques are not covered by the home insurance policy. Other than these, damage caused by war and damage to property while it lies vacant are also not covered.
Such conditions are known as ‘exclusions’ in the insurance contract. It is advisable that the buyer read the fine print cautiously to understand such exclusions before buying. This will be helpful in avoiding disappointing outcomes at the time of claims.
Can Buyer Decide the Sum Assured?
Like other asset insurance policies such as motor insurance, the value of the house and its content is decided by a professional valuer appointed by the insurance firm. The sum assured (S.A.) in a home policy is an important factor to be considered as it will be a deciding factor at the time of claim settlement. Usually, the insurer will settle claims based on the proportion of S.A. to the property value.
This article only illustrates some common features and benefits of home insurance policies available throughout the market. Other than these different insurers may offer different exclusions and features depending on the buyer’s eligibility, property type, and other factors.