Insurance Savvy
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Protect your Dream Home against Destruction with a
Home Insurance Policy!
A home means different things to different people. For some it is a property in which they have invested money, and for some it is merely a place of dwelling. There are a few others for whom, a home of their own is a dream of a lifetime come true. A number of people get into a long term financial commitment by means of a home loan to build this dream house. But, no matter what your home means to you, it is important that you protect it against damage and destruction.
While floods and earthquakes may not really be eminent dangers that one would face on a daily basis, damage due to fire is something that can happen to any home. For this reason it is important to get your home covered with a Home Insurance policy. A Home insurance policy ensures that you bounce back to your original position with respect to your home, in the event of a disaster.
Most policies cover the reconstruction cost in the event of damage due to the following events:- Earthquake, Fire, Lightning
- Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation
- Explosion / Implosion
- Aircraft damage
- Riot, Strike and Malicious Damage
- Impact 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 (excluding loss or destruction caused by forest fire)
What does a Home Insurance Policy cover?
A standard Home Insurance policy covers the reconstruction cost of the building. However, it does not cover the cost of land.
A standard Home Insurance policy covers only buildings made with materials such as cement, bricks, stones, which is also termed as pucca construction. In other words, the policy does not cover buildings having walls / roofs of wooden planks /thatched leaves and or grass / hay / bamboo, plastic, cloth, asphalt cloth, tarpaulin, which is termed as Kutcha construction.
What should be kept in mind while taking up a Home Insurance policy?- While taking a Home Insurance policy, it is important to insure your home for the correct value. You should neither underestimate nor overestimate the value of the Sum Insured
- The Sum Insured should be the amount required to reconstruct your building to its original condition, it should not include improvement or enhancement of any kind
- To estimate the reconstruction cost correctly, one should not only have an understanding of the prevailing cost of construction, but also keep in mind the possibility of increase in this cost in the forthcoming years
- If you underestimate the value of reconstruction, the value of settlement will get proportionately adjusted, at the time of claim, and you may not get adequate cover for reconstruction
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