How Does Home Insurance Help Against Natural Disasters?

Thousands of people have lost their homes after the incessant rain that had caused flooding in Chennai. While there is little one can do against natural disasters, we can minimize its loss by buying a home insurance policy to protect both your home and belongings against any damages.

Types of coverages under home Insurance

Home insurance coverage can be further divided under the following heads:

Building/structure insurance: It offers coverage to the building structure against damages caused due to man-made and natural calamities. The condition under which the insurer pays are:

• Damage due to strike, riot, etc
• Natural calamities, such as cyclone, storm and earthquake
• Third-party liability or personal accident
• Bush fire
• Lightning and damage caused due to impact

Content Insurance: It offers coverage to the objects inside your home, such as jewellery, electronics, furniture and appliances. Coverage is provided against the loss or damage caused due to:

• Theft/burglary
• Storm
• Fire
• Breakage of plate glass

Things to keep in Mind Before Buying Home Insurance

Before you choose to buy a home insurance, you must consider whether it can actually secure your home or not, otherwise you might be at a loss in case of a natural calamity/ theft or damage. Here are some important points to get started:

• Sufficient sum insured:Since sum insured is the amount that an insurer pays at the time of claim, it is imperative that it should reflect the correct property value. Most people choose the sum insured equal to the market value of the house. However, the insurer settles claim on a reinstatement basis, which fluctuates with construction costs.  Therefore, at the time of policy renewal, one should increase the sum insured limit as per the prevalent construction cost.

• Comprehensive insurance policy: Most people have house insurance together with their home loan. However, it is important to ensure that it is a comprehensive cover. Most of the policies cover structure only and not the articles inside. But what would happen if there is a theft or an electrical breakdown? A comprehensive insurance policy is required to cover both structure and household items.

• Tenure of the policy: You can either opt for an annual policy or a multi-year insurance policy. While, the yearly insurance policy gives you an option to revisit the sum insured’s value every year, a long-term policy offers discounts in the form of low premium rates.

How much it cost?

A house is one of the most expensive assets owned by an individual. While you can’t avert natural calamities, you can certainly protect yourself against them. A home insurance can shield you against the unforeseen circumstances. Here is a comparative table of the various plans available: