Is Home Insurance An Expensive Investment?

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“Home”, the term conjures up so many memories and images: feeling safe, being with your loved ones, having a warm meal, enjoying some peace and quiet, and much more.

Buying a home can be expensive. But a home and its contents are more than just financial investments or expenses. A home makes its residents feel happy and safe. That is why, when we feel comfortable and familiar with any place, we say that we “are feeling at home”.

But what if something were to happen to your precious home? Homes and their contents are vulnerable to natural disasters, fires, theft, burglary, man-made calamities such as riots and strikes, and much more. It is quite natural that one would want to protect their home against these dangers. Buying a home insurance policy is an effective way to do that. However, many people may think of home insurance as an expensive investment and may hesitate to buy it. * Claims are subject to terms and conditions set forth under home insurance policy.

But is home insurance really an expensive investment when you consider the benefits it provides? Let’s have a look.
Understanding Home Insurance and Its Pricing

The cost of a home insurance policy depends on multiple factors.

For the uninitiated, a home insurance policy provides financial compensation to the policyholder if the insured property gets damaged due to an event or risk covered under the policy. Depending on the plan you opt for, you may receive coverage for different risks and events. * Claims are subject to terms and conditions set forth under home insurance policy.

The maximum amount you may receive in the event of a claim (also called the sum insured) for lightning, explosions, riots, strikes, cyclones, floods, and so on, as specified in the policy wordings, can be based on either of two aspects:

Reinstatement value basis: This is the value for replacing a covered item with another item of the same type and make. Depreciation may not be considered here.

Market value basis: This value is derived after deducting the depreciation from the reinstatement value, based on the age of the covered item. *

Claims are subject to terms and conditions set forth under home insurance policy.

Since the premium of your home insurance plan depends on the sum insured, it may be determined by the overall value of the property and the contents you are insuring.

Note that other factors, too, may affect the premium, depending on the insurer’s underwriting principles.
Why Home Insurance Can Be Worth the Cost

Now that you have an idea of the cost of your home insurance policy, let’s see why it can be a worthwhile purchase:
It provides compensation in difficult times *

If you have invested a considerable amount of time, energy and money into your home and its contents, then receiving financial compensation in case of damage or loss can be very beneficial. It can give you the support you need to make your home the way it was before.

Claims are subject to terms and conditions set forth under home insurance policy.
It provides coverage for a variety of items *

Home insurance plans can cover different types of items, based on the policy wordings. For instance, the Householders Package Policy from Bajaj Allianz General Insurance Company covers damages against plate glass fixtures, jewellery and other precious items, breakdown of domestic appliances, electronic appliances, pedal cycles, and so on, as specified in the policy wordings. It also covers the loss of baggage during travels within India.

The coverage also depends on the policy you choose, as there can be different types of home insurance plans in the market. Some other plans might cover works of art and curios as well, as specified in the policy wordings.

Claims are subject to terms and conditions set forth under home insurance policy.
It offers personal accident insurance and personal liability coverage *

If the main breadwinner of the family undergoes an accidental injury or passes away due to an accident, the personal accident coverage aspect of the plan can be of help. It provides compensation to the policyholder and/or the beneficiaries, depending on the policy wordings.

Personal liability coverage, on the other hand, can help if a third party suffers a bodily injury or property damage on the insured’s property. Claims arising out of such situations can be dealt with the help of a comprehensive home insurance plan.

Claims are subject to terms and conditions set forth under home insurance policy.
It offers peace of mind

One of the biggest reasons a home insurance policy can be worth the purchase is the peace of mind it can provide. A home holds financial and emotional value for the family that lives in it. Hence, ensuring it has the financial support it needs in the case of an unfortunate event is crucial. By opting for a home insurance policy, you can provide your home with protection and thus give yourself better peace of mind.

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