In India, everyone dreams of having their own home. To fulfil this dream, people risk all their savings and often take home loans. In such situations, everyone wants to protect their dream home. For this, home insurance is very important, as it comes in handy in case of an accident. However, when taking a home loan, it is crucial to pay special attention to what is covered in the insurance and what is not.
Many Indians who are planning for home insurance are facing several problems. So, here are some tips to avoid these important issues and prevent losses.
Who Provides Home Insurance?
General insurance companies insure your home. It covers many things. Such as compensation for damage to the home due to flood, storm or fire. But, while getting home insurance, one should read the terms and conditions carefully. It is written in which cases you will get coverage and in which you will not.
Commercial Use of the Property
If you insure your house and later convert it for commercial use, it will be considered a commercial property. In this case, your home insurance policy will not cover any damages. If you plan to rent out the house for commercial purposes, insuring it as a residential property will not be beneficial.
Demolition Orders
Home insurance will not cover your property if a government authority orders its demolition. This often happens with illegal constructions. To avoid this issue, ensure that the house’s legal documents are in order before buying or building it.
Loss Due to Poor Construction
If any damage occurs due to defects in construction, the insurance company may reject the claim. Therefore, it’s essential to ensure that high-quality materials are used while building the house. If the contractor is using substandard materials, you should refuse to proceed with the construction.
Home Insurance Premium
The premium for home insurance depends on the price of the house, location, and other factors. Typically, home insurance premiums range from 0.5% to 2% annually, based on the house’s value. Before purchasing home insurance, it’s advisable to consult a financial advisor to determine the best policy for your needs.