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Home Insurance in India: Types, Benefits and Cost
Updated : November 3, 2023
Author :
Table of Contents
When you own a home, what is your biggest fear? Is it thieves breaking in and taking everything, losing your home because of a fire, or flooding, a cylinder bursting and destroying everything?
Your fears are not baseless, all these things have happened to homeowners across India. They might not happen to everyone, and might not happen a lot, but when it does, the loss is devastating.
What if I told you there is a way you can minimize the loss you face in such events? The answer is Home Insurance. Home Insurance policies offer protection to the structure and contents of the house in case there is any physical destruction or damage that happens to the house by unavoidable perils. It is much needed to protect your most expensive asset- your home. Now, here are some surprising facts you need to know about home insurance.
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Indian’s and Home Insurance
As per data from The Asia Insurance Review - Aug 2017 - “Home insurance penetration in India is just about 1%. Barely 3% of houses in India are insured. Countries like US, UK, France, Australia and China have home insurance penetration in the range of 90-97%.”
This is especially surprising as we spend lakhs/crores for our houses, but we don’t think it’s important to insure it and protect it from unforeseen harm. 60% of India is vulnerable to earthquakes and other natural calamities, 38 Indian cities lie in high-risk seismic zone, and not all builders follow safety guidelines and norms that should be followed.
Type of Home Insurance
To make sure your home is well protected, there are many types of home insurance policies to choose from. You need to figure out the best home insurance policy for your needs, they are –
Standard Fire and Special Perils policy – This covers loss and damages caused due to any natural calamity, damages caused due to explosion/implosion, man-made anti-social activities (strikes, riots, etc.), damage caused by direct contact of rail/road, vehicle, damage caused due to bursting or/and overflowing of water tanks, pipes and apparatus, subsidence including rockslide and landslide, missile testing operations, leakage from automatic sprinkler installations and more.
Home Structure/Building Insurance – With this insurance, the structure of your home is covered, and the permanent fixtures within the house are covered too.
Public Liability Coverage – If anyone (a guest or third party) in your home gets injured or their property gets damaged, this insurance will save you.
Personal Accident – With this insurance compensation is given in case of permanent disablement or death for those insured.
Burglary and Theft – If anything is stolen, this insurance will cover your loss.
Contents Insurance – This cheap home and contents insurance is in case anything in your house is damaged, and not just the house. If a flood ruins your furniture and electronics, the home insurance India will cover your loss.
You can get home insurance when you don’t own or live in a home
Sounds strange? But, that’s exactly why you have Tenants’ Insurance and Landlords' insurance. Tenant’s insurance will cover all the possessions you have in your rented house. You don’t have to own the house to buy this insurance.
Landlords' insurance will help you cover any loss from loss of rent and public liability. It also takes care of any structural damages that might occur due to unforeseen circumstances.
Tenure of Home Insurance Policies
Home insurance policies are offered in both short-term and long-term variants. Long-term home insurance policies extend beyond a one-year term. Here are the available policy tenure options for home insurance coverage:
| Coverage | Policy Duration |
| Only Building Structure | 1 - 10 years |
| Only Home Contents | 1 - 5 years |
| Both Building Structure and Home Contents | 1 - 10 years |
Reasons Why You Need to Get Home Insurance
1. Homeowners Insurance Guards Your Investment
The level of coverage for a conventional homeowners insurance policy is determined based on the actual cash worth or replacement cost of your property, unlike forced-placed insurance, which is often offered to protect just the lender's interest in the collateral, up to the loan amount. Your lender might need homeowners insurance.
2. Comprehensive Coverage is Offered by Homeowners Insurance
A typical manufactured home insurance policy covers more than simply the structure itself. Additionally, it offers protection to:
- Additional structures A homes insurance policy will cover the monetary losses brought on by insured risks if your property has additional buildings like a deck, garage, or fence.
- Additional living costs - Your home's insurance will pay the cost of living elsewhere and additional expenses that otherwise would not have been spent, up to the limit specified on the policy, if your home is substantially damaged or destroyed due to an insured risk.
- Personal property: If your furniture or electronics are damaged, destroyed, lost, or stolen, your manufactured home insurance coverage will pay for the expense of repairing or replacing them.
- You, your household, and any visitors: A typical homeowners policy will pay for related medical expenses, repair costs, and legal fees if you or a member of your family is at fault for unintentionally hurting someone else or causing damage to someone else's property.
3. Your home is covered by insurance to prevent lawsuits.
Homeowners insurance extends beyond providing medical expenses for third parties who unintentionally hurt themselves in your home. If you're found to be legally responsible for the injury, this kind of insurance can also assist you in avoiding having to pay the financial compensation granted to the injured party and the accompanying legal fees out of your own pocket.
Home Insurance Limitation
Though home insurance can protect you from a lot of loss, there are a few things that it will not cover, such as –
- Purposeful or willful destruction of property
- Regular damages caused by wear and tear
- Damage or loss caused by war
- Loss to property unoccupied for a long period of time
- Money in the form of cash, antiques, and collectables etc.
- Loss or damage caused to any electronic equipment because of overuse
- Pre-existing damage
- Nuclear war
Home Insurance Cost
The amount you pay will vary depending on your insurance provider, they will use their own home insurance premium calculators to give you exact amounts, but on an average for example –
If the sum insured is of Rs.40 lakh for the building + Rs. 5 lakhs for contents, your cost could be as low as Rs.2,000 to Rs. 4,000 per annum. If you add more insurance coverage options like burglary and theft, personal accident, etc. the amount will go up marginally on the property insurance premium calculator.
Home Insurance Tenure
Home insurance tenure varies from lender to lender and hence, the applicant must carefully consider the tenure period and pay the house insurance premium accordingly. The applicant must compare home insurances from different lenders and find the perfect match for them as per their requirements.
What is the Salient Feature of Home Insurance in India?
Home Insurance in India is very comprehensive and offers the applicant to claim the principal amount under two different categories namely- (i) Cover for Damages and (ii) Cover for Liabilities. A lot of times, home insurance even provides an option to avail a cover for damage caused beyond the structure of the house. Different lenders have different criteria and classifications for a claim made through these categories and careful consideration should be maintained while choosing an insurance plan for your house.
Eligibility Criteria for Home Insurance in India
While specific eligibility criteria for home insurance in India may vary among different insurance providers, the following represents the typical prerequisites:
- Homeowners are eligible to purchase home insurance.
- Renters who want to protect their valuable possessions can also obtain home insurance.
- In housing societies, any authorized community member can acquire home insurance.
- The minimum age for purchasing home insurance is 18 years, while the maximum age is 60 years.
- Properties such as kutcha houses, plots of land, or homes under construction cannot be insured.
- A poor credit history may disqualify you from eligibility.
- Geographic factors, such as proximity to forests or coastal areas, may also be considered when determining eligibility for a home insurance plan.
As responsible homeowners, it's crucial to conduct online research, compare insurance plans, and ensure that the policy aligns with your specific needs before making a purchase decision.
Benefits of a Home Insurance in India
Different types of damage are covered by the homeowner's property insurance policy. For instance, broken water pipes, damaged water lines, or structural damage It also offers protection for damaged walls, flooring, windows, and doors. Not just the property but also the loss and damage to the house's contents are covered. It can be roughly divided into the following four types of charges for the insured property:
- Costs of interior damage
- External damage costs
- Loss or damage of personal assets in a house
- coverage for bodily harm that can be sustained while on the harmed property
Depending on a number of variables, different home insurance policies may offer different levels of coverage. The amount varies depending on the size and type of residence (owned/rented). Along with the price, other factors including age, place of residence, replacement value, and location are important. It may be important to consider your claim history or the local crime rate. Finally, the type of coverage you select is up to you. The deductible and premium amounts that you are willing to spend are entirely up to you. The deductible is the sum that must be paid before filing a claim if the premium is insufficient. The premium is lower when the deductible is large and vice versa.
Exclusion in Home Insurance
Under certain circumstances, your home insurance provider may feel that your case doesn’t qualify for an insurance sum to be paid. These exclusions are mentioned in your home insurance brochures and should be considered while applying for home insurance. Here are some of the major exclusions in home insurance in India:
- Flooding
- Earthquakes, landslides, and other movements of the gound
- Termites, rats, and any other infestations
- Mould
- Poor maintenance or neglect of the property
- Power outages and surges
- Aggressive or dangerous dogs
- Home-based businesses
- Building ordinance or any other code requiring construction in the house.
- Any damage that may have been caused intentionally, either by you or any other resident of the family.
- Demographical war
- Nuclear Bombs and other hazards
- Government action
Claim Settlement Process for Home Insurance
Claim settlement is one of the most important services offered by any insurance company. The steps are very simple, yet the involvement of a copious amount of paperwork can make the process a bit confusing and overbearing. However, as an informed citizen, you can take advantage of the easiest methods of claim settlements through insurance. The settlement is completed only after all the paperwork is processed and the due process is completed. Here is a step-by-step process for claim settlement after insurance:
Claims Process
- Intimation of claim
- Processing the claim along with the required documents
- Verification of the submitted documents.
- Claim Settlement
As you can see, home insurance is much needed, very beneficial and can help you save lakhs by investing just a little bit every year. If you wish to learn more about home insurance drop us a comment below or visit NoBroker by clicking below.
FAQ's
Ans. Home insurance, also commonly known as homeowner’s insurance is the security cover availed by a property owner to avoid any unforeseeable damage to the property. The insurance may cover structural and other common damages to a property depending on the premium paid by the insured client.
Ans. In a country like India where the damage rate to a property is pretty high, it is beneficial to avail of home insurance. The insurance not only protects you from any losses you may incur against your property but also provides much-needed relief and a sense of security to a property owner. The premium prices are inexpensive compared to the value proposition offered, making home insurance a very convenient option to secure your property against losses.
Ans. Based on the premium paid by the insured client and the terms and conditions of the insurance company, here is a list of common exemptions in a home insurance policy:
Flooding
Earthquakes, landslides, and other movements of the gound
Termites, rats, and any other infestations
Mould
Poor maintenance or neglect of the property
Power outages and surges
Aggressive or dangerous dogs
Home-based businesses
Building ordinance or any other code requiring construction in the house.
Any damage that may have been caused intentionally, either by you or any other family resident.
Demographical war
Nuclear Bombs and other hazards
Government action
Ans. The global pandemic has brought a state of uncertainty where the job losses are running in millions. Apart from reduced policy rates and fewer claims being made, the insurance industry has pivoted to a digital model. Leading companies are completing the KYC and other verification processes online. This seems to be the next big change in the insurance industry as all the big players aim to go big online.
Ans. A home insurance policy provides total coverage towards any losses for your property and the items inside your property. This helps a homeowner plan and minimise their losses significantly. A comprehensive home insurance policy will help in recovering losses for theft and burglary as well depending on the premium paid by the insured client.
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