Buying a home and achieving the title of homeownership can be exciting. It can even take a considerable amount of savings and time to get to the point where you can actually afford to take out a mortgage and buy a house. If we talk about buying a home from the financial aspect, then it is a huge financial investment, which is why home insurance is so crucial.
Like all other types of insurance in India, home insurance has its own advantages and disadvantages. Understanding the advantages that home insurance offers and its downsides can really help you decide on whether you should buy one or not!
So, let’s start with the meaning of home insurance first, and then we will move on to the pros and cons that it has to offer you!
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What is Home Insurance?
Popularly known as Homeowners insurance, Home insurance is an insurance policy that covers the costs and damage to the insured property or your home. It is a form of property insurance and one of the multiple general insurance products.
The home insurance policy safeguards your rented flat, bungalow, apartment, owned house, or villa against potential risks. It moreover covers the costs of damages due to any unforeseen events.
Below-mentioned is the causes for which home insurance can be claimed:
Explosion or smoke
Natural calamities like hails, lightning, fire, wind storms, etc
Damage due to road or rail construction
Man-made issues like theft, riots, property destruction, vandalism, etc.
Collision of an aeroplane or any other vehicle which is not your own
In general, home insurance policies might differ in what coverage they offer to depend on a list of factors. It varies as per the type of residence and the size of the residence. Other factors like place of residence, age, replacement value, etc., also matter. Finally, it depends upon what sort of coverage you opt for.
As you have got to know the meaning of home insurance, let us now move forward and understand the pros and cons associated with it.
Advantages of Home Insurance
The advantages of home insurance are as follows:
1. Low deductible relative to repair cost: In comparison to the cost involved in getting the home repaired, which can go over a hundred or thousand rupees, the deductible is very low.
2. Covers significant damage: Home insurance policies offer protection for damage that the majority of people won’t be able to cover out of their own pocket. Damages covered by explosions, lightning, fire, etc., are the top examples of the protection offered under home insurance policies. This way, home insurance policies offer peace of mind.
3. Protection from lawsuits: If a person sustains an injury in your house or on the grounds of your property in India, you’ll not be legally liable to pay the cost of the medical bills of that specific person. Medical bills can cross hundreds or thousands of rupees, so this aspect of a home insurance policy is a significant advantage.
Disadvantages of Home Insurance
The disadvantages of home insurance are as follows:
1. Does not cover everything: The foremost downside of a home insurance policy is that it does not cover every type of damage that your house sustains. Certain damages incurred by flood damage and storms in certain localities, for instance, will not be covered by the home insurance policy. Therefore, it is highly crucial to read up on what each policy offers coverage for.
2. Cost involved: Homeowners' insurance is expensive. Also, the premiums that you would need to pay every month can be high. This altogether makes a home insurance policy pretty expensive. The high premiums are because of the low deductibles that you’ll have to pay in case you need to make a claim.
3. Terms and conditions: Last but not least, there might be some hidden costs of home insurance policy that policyholders are unaware of because they are hidden in the terms and conditions of the home insurance policy.
Opting for a home insurance policy is a big decision homeowners need to make. Therefore, being aware of the pros and cons of a home insurance policy and its coverage might help people choose the right policy for them! So, what are you waiting for? Go through the article above and decide whether or not you need a home insurance policy. If you ask us, then buying one is highly advantageous for you!
Read More: 6 Types of Home Insurance in India You Must know