Monday 6 March 2017

How does a home insurance policy add to the “beauty” of your house?

It is an accepted societal norm that says, “The way you dress, you lead your life, and the home and environment you live in, mirage your social standing.” It is, therefore, no exaggeration if I say that the concept of ‘luxury living’— is here to stay at least for the next 10 or 20 years.

At the end of the day, everyone strives to live in a place that acts as not only a comfort zone and an extension of their personality but also a place that they can flaunt to their friends and family.
How does a home insurance policy add to the “beauty” of your house?

In the present times, home design and styling have become innate to the expression of self, almost like a beautiful story unfolding through designs. The four walls of a house are passionately turned into an ‘object’ or possession depicting the social status of the owner. Nearly 70% to 80% of an individual’s wealth is spent on building or buying a house and then adorning it with articles like furniture, appliances, etc.

To meet this new-age burgeoning demand, architects, interior designers, and real estate developers are continuously raising the bar by complying with the global quality standards in terms of landscape design and amenities.

However, the pertinent question that arises here is—when you leave no stone unturned in decorating your house, why would you ignore its ‘protection’? Here, I am not talking about fire safety equipment and burglary alarms, which are installed in your house but a home insurance policy. After all, a comprehensive home insurance policy is imperative to keep the ‘beauty’ of your house intact. Here by beauty, I mean protection of both interior and exterior structures!

We cannot deny the fact that we are living in a dynamic world where environmental and political changes are not new— floods wash those areas which never experienced rains and droughts have occurred in those regions which had a perfectly normal monsoon. Open any newspaper—be it local or national— and you can easily find reports of crimes from riots to burglaries to theft. If you think it’s only during the night that these goons become active, then read this— “The daylight robbery took place in a posh DLF City Phase-1 area in which goods worth Rs 12.5 lakhs were stolen.”

Bihar Floods, 2016
5521 houses and 4641 hutments damaged
Manipur Storm, 2016
100 houses damaged
Odisha Rain, 2015
423 houses damaged
Jammu & Kashmir floods, 2014
Damaged 83,044 pucca houses fully and 96,089 partially. Similarly, 21,162 kutcha houses were fully damaged and 54,264 partially damaged 99,305 huts, and cowsheds, were also damaged
Hudhud cyclone, Andhra Pradesh, 2014
Damaged 2,470 houses fully, 11,097 houses severely, and 1.36 lakh houses partially
Odisha Floods, 2014
Over 30,000 houses damaged
Assam Floods, 2014
54,088 houses were damaged and 82,095 houses were partially destroyed
Kedarnath Floods, 2013
Property damage of Rs 2000 crore (approx.)
Cyclone 'Phailin', Odisha, 2013
2.4 lakh houses damaged in Ganjam district

You have spent a bomb in decorating your house, now you should safeguard it, and the home insurance policy is the right weapon to do so.

With this background, it is necessary to make home insurance an important part of your long-term financial planning.

Here is a snapshot of what you can get from a home insurance or property insurance:

All Round Protection: Home insurance plans are comprehensive in their coverage. They give year-round protection against various financial risks your house can be exposed to. For instance, property insurance covers your house and contents against natural disasters, like floods, earthquakes, etc. among a list of man-made losses, like riots, terrorism, burglary, etc.

While the basic policy offers comprehensive cover, you can add riders, like alternate accommodation cover, keys and lock replacement, dog insurance, etc.; to get complete coverage

Customizable Cover: Whether you are an owner or a tenant or whether you are living in a residential building or an independent villa, you can purchase a customized home insurance policy as per your requirements. For instance, you can buy a policy to insure only the structure the content, or both. In addition to this, you can also choose to insure the content of your house either on a reinstatement or depreciated value.

Easy to Buy: Gone are those days when buying insurance meant making numerous rounds to an agent’s office. Thanks to technological advancement, you can purchase your home insurance policy online with a few clicks of the mouse. You only need to give minimal information about the assets which you want to cover and the policy will be issued instantly.
Affordable Rates: Contrary to the popular perception, a home insurance policy is cheaper than the dining bill of two people. For instance, a home insurance cover of Rs 50 lakhs can cost you between Rs 250 and Rs 300/month. Moreover, there are some insurers, which offer a huge discount of 50% when you opt for a 10-year structured cover.

Easy Claim Process: Depending on the nature of loss, all you need to do is to submit a standard documentation to substantiate the damage, sign a few papers and the insurer will process your claims.

So, How Much Sum Insured Is Sufficient?

A home insurance can give maximum benefits only if it is sufficient. Pay attention to the following two components of a home insurance policy to calculate sum insured:
(a)    Coverage for the structure of the house
(b)   Coverage for the content such as electronic appliances, furniture, jewellery, etc.
Cover for the structure: It has the following three parts:
(a)    Reinstatement Value = It is based on the built-up area and the total construction cost.
(b)   Agreed Value = It is calculated the area of the land and the total cost of the property.
(c)    Indemnity Value = It includes the total construction cost minus the depreciation value of the property.

It means if the built-up area of your house is 1000 sq. ft., the cost of your house is 1,500 per sq. ft. and the construction cost is Rs 1,000 per sq. ft., the reinstatement value will be Rs. 10,00,000 (1000 x 1000). If the home insurance is purchased on the basis of the agreed value, it will be Rs. 10,00,000 (1000 x 1000). Similarly, in the case of indemnity value, it will be Rs. 12,00,000 {Rs. 15,00,000 (1000 x 1500) minus Rs. 3,00,000 (20% of Rs. 15,00,000, if we assume the depreciation rate as 20%)}. You should go with a sum insured which is sufficient to rebuild your house in case of any mishap.

Cover for the Content: 

At the time of purchasing the insurance for content, always declare the correct value of the items you want to insure. There are some insurers, which ask for photographs of the items as authentic proof of the existence of belongings in your house. However, the criteria may vary from one insurer to another.

Note: Some policies adjust your coverage as per the inflation rate. These property insurance plans are preferable even if it means, shelling out a little extra premium.

The Final Verdict

In conclusion, the concept of luxury living and the desire to create an aesthetically pleasing and socially esteemed living space are integral aspects of modern society. As individuals invest significant resources in designing and embellishing their homes, it becomes imperative to safeguard these assets with adequate protection. Home insurance emerges as a vital component of financial planning, offering comprehensive coverage against various risks ranging from natural disasters to man-made incidents like theft and vandalism.

The evolving landscape of home insurance provides homeowners and tenants with customizable policies tailored to their specific needs and preferences. With technological advancements, purchasing home insurance has become more accessible and convenient, offering affordable rates and simplified claim processes. Furthermore, insurers offer options to adjust coverage based on inflation rates, ensuring continued adequacy of protection over time.

Ultimately, a comprehensive home insurance policy not only secures the physical structure of the house but also protects cherished belongings and memories associated with the home. By investing in adequate home insurance coverage, individuals can enjoy peace of mind knowing that their living space is safeguarded against unforeseen events, allowing them to continue embracing the comforts and joys of home living for years to come.

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