Building and owning a home is certainly a dream come true, but the next important question that you need to answer is whether you have taken the measures to protect it. A home insurance protects you from all impending casualties and catastrophes, saving you not only money but giving you financial protection at times of need rendering you safe as well. Most, often feel that locking your home is all that you can do for its safety but that doesn’t guarantee its safety even against burglary also. There are certainly several other factors beyond our control that can damage your home and so a home insurance policy would protect you from all or every possibility of damage. Most of us actually don’t realize the crucial role of home insurance until it’s too late for them. If you are new to home insurance, here is the knowledge that you need of home insurance which is also considered a basic necessity in many other countries.

What cover does it provide?

Home insurance provides cover against natural disasters like a flood, earthquakes or cyclones which have become common nowadays. Any harm caused due to such natural disasters would be provided cover by your home insurance and also provide compensation for the damages due to other manmade hazards like fire, theft or vandalism or any other such inadvertent events.

A home insurance can even provide you with the cost of temporary living expenses when your home becomes uninhabitable due to the damage caused. This cost would be borne by the insurance company until the home is rebuilt.

A home insurance inevitably covers the structural damages and the cost of the building along with the movable assets like clothes, furniture and gadgets as well. A home insurance would also protect you against any liability that may arise to any other third party or any damage caused to the third party within the confines of your home or property.

What are the types of home insurance policies in vogue? 

Building or Structural Insurance can be procured by generally the homeowner which covers the damages caused to a building or the structure of a building as well as the outdoor structures like the outhouse, garage or sheds.

A Home Content Insurance can be obtained by people staying in rent as well and this type of policy covers the contents of a home like the clothes, and all movable assets in the house.

How is the home insurance valued?

Generally, under any home insurance policy, the compensation depends on the damage of the home or the property which are insured which is assessed after the damages occur. The amount of the claim that is settled by the insurance company depends on the valuation of the home and the assets that are insured. The insured can choose to insure only the building, the contents or both. The valuation is done based on two methods of valuation as under.

Reinstatement Value 

This is the type of insurance where the cost of the construction of the home would be borne by the insurance company if it is so needed. The construction cost of the house includes the materials and labour costs too.

Indemnity Value        

In case the home is insured based on the indemnity value, the insured can claim the sum insured along with the total premium paid in case there is a loss or damage to the property. This would also take into account the depreciation of the property due to age.

However, few incidents or loss like damages caused due to any radiation or nuclear activity, any civil war, or a military attack is excluded from the home insurance coverage. Any intentional damages or act of terrorism is excluded from coverage as well.

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