Home insurance is increasingly popular worldwide but still rare in India. One reason is the lack of awareness – even those with policies are often unaware of the minute details. Here, we debunk some common myths to bring clarity to home insurance.
Home insurance only covers repairs to the building
Home insurance covers not only the structure of your house but also stolen/damaged contents such as appliances, furniture etc. However, certain items may only be covered up to a limit (e.g. jewellery).
Home insurance is too expensive
Home insurance is very affordable. For instance, a comprehensive structure plus contents cover for a house worth ₹ 20 lakh costs less than ₹2.2 a day, or ₹ 800 annually. You can lower premiums further by installing safety technologies in your home; by raising the deductible, i.e. the portion of potential damage costs that you pay yourself; and by only buying relevant add-ons, e.g. if you live at an elevation, you may not need flood cover.
It’s too complicated to make claims in a crisis
Home insurance claims in the aftermath of a crisis aren’t necessarily complicated. Insurers set up field offices in disaster-hit areas; claims can be made by phone; and forms are stored digitally so damage to offices or documents doesn’t hamper claims. Remote technologies allow quick damage assessment and insurers may even relax some procedures to enable quick settlement.
The insurance bundled with my home loan is enough
Such bundled insurance only covers the structure (not contents) and only basic risks e.g. fire. Besides, the sum insured is only up to the loan amount – not the price of the property itself, which will grow much higher.
No point buying home insurance if you don’t own the house or don’t live there
Tenants can insure the contents of the house, even if not the house itself. Besides, if a tenant shifts, she can file a request and have her policy apply to her new address. Landlords can get insurance for the structure and the contents of a house even if they don’t live there.
I will always receive the price of a new home/appliance if they are damaged
If, say, your TV is damaged/stolen, you will not automatically get the price of a new TV. It depends on the premium. For structures, the sum insured will be either the ‘reinstatement value’ (i.e. construction expenses of the house) or ‘indemnity value’ (construction expenses minus depreciation). For contents, the insurer may subtract depreciation or reimburse the items’ full reinstatement value (sticker price): it depends on the premium.