Estimation of Home Insurance Cost
There are several ways you can estimate the home insurance cost before purchasing it. In order to estimate the home insurance cost, you must be aware of cost-related information about your home and the content kept inside it.
Estimate Rebuilding Cost
When you go on to purchase a home insurance policy, the first thing insurer asks is the build cost of the house.
Rohan builds a home from scratch and that costs him around Rs 10 Lakh. He chose to cover his home with a home insurance policy. However, he thought to purchase the home insurance policy with a sum insured amount of Rs 5 lakh.
This is where he made a mistake, a few months later, an 8.5 magnitude of earthquake hits his city and his house gets severely damaged and would require proper reconstruction. Then he estimates the rebuilding cost and that comes out more around 8 lakhs.
Since he purchased the home insurance with the sum insured amount of Rs 5 lakh, he is eligible to get Rs 5 lakh only and has to put in extra Rs 3 lakh out of pocket. That is why it is suggested to know the estimated build cost of the home and purchase a home insurance policy with more sum insured amount than the re-build cost. Which in Rohan’s case should be around Rs 11-12 lakh.
Estimate Personal Property Value
Apart from estimating the rebuild cost of the house, make sure to estimate the value of your personal property. The home insurance policy provides coverage for the content of the house such as clothes, furniture electronics, bathroom items, etc.
There are several insurance companies that have limits on high-value items such as jewellery, artwork, etc. If the coverage for such high-value items is not included in the policy then you can opt for add-ons by paying an extra amount.
When you decide to purchase a home insurance policy, it is suggested to check the kind of coverage your desired policy provides and always opt for the sum insured higher than the re-building cost as well as the cost of the content inside the house.