A home holds immense value in our lives. A home is where memories are made and shared, where traditions are followed and passed on to generations. It is our liability to protect and maintain it. There are a lot of unpredictable risks that your home is exposed to all the time. Natural forces like tornados and hurricanes, calamities like earthquakes may have detrimental effects on your home. Even a small short circuit can burn your whole house down. Recovering from such a devastating aftermath is not easy, considering the amount of capital investment it requires. Home insurance can safeguard your home by providing different kinds of coverage for damages caused to your home.
Need for a home insurance
Apart from covering for the damages caused to your home due to unfortunate events, getting your home insured opens up a lot of doors for you that you might not be aware of. Getting a home insurance policy for your home opens up the option to get a loan against it. Financial institutions do not accept the property as mortgage unless they are insured. Hence you can get your home insured, to pledge it as a mortgage and use the loan amount for your urgent needs. Also if you want to rent your current home, the owner of the land might ask for the insurance papers. Hence getting your home insured opens up the horizon, letting you take advantage of multiple benefits.
Types of home insurance coverage
There are several coverages that a home insurance loan provides for different forms of damages incurred to your house. You can select or deselect some of the coverages as per your requirement. Let us talk about the nitty-gritty of home insurance coverages.
Coverage for infrastructural damage
Natural catastrophes like earthquakes, tornados, tsunamis etc. can cause major structural damage to your home. It might devour windows, sheds, garages, fences etc or might even bring the whole house down. Apart from all of the damages caused to the exteriors of your home, something like a tornado can even cause colossal damage to your interiors. Damages caused to the exteriors and Interiors like furniture, appliances etc. are covered under the home insurance policy. In case you possess some antique and expensive items like jewellery or a famous painting etc., you need to additionally add them up in your policy.
Personal liability coverage
This attribute of home insurance policy covers the damages or injuries caused to others because of you or your family members. For instance, a branch of the tree in your backyard might fall and break your neighbour’s expensive bonsai or might cause injury to the neighbouring family members. Personal liability coverage is there to cover for such damages.
Coverage for supplementary living costs
There are times when there is a need to renovate your home, to add charm and new features to it, to catch up with the latest trend. It might also involve repair works, waterproofing etc. Such times call for relocation. Getting additional living cost coverage will cover for the costs incurred on relocation which includes accommodation fee, food bills etc. but it does come with a certain limit till which the carrier will cover for the expenses. Any spendings above the set limit will have to be covered from your savings. Hence, make sure to enquire your carrier about the approved limit, to manage your costs in a better way.
Stages of home insurance coverage
There are three different measures of home insurance coverages that a home insurance policy offers. You have the freedom to opt for the one that goes well with your budget and requirements.
Cash value coverage
In case you opt for cash value coverage, you will be receiving the coverage amount based on the cost of the damaged products in the current market. Since the value of many products falls over time, the capital you receive may be lower than the one you spent on buying those.
Replacement cost coverage
Opting for a replacement cost coverage will let you claim the net cost of the damages including the depreciation value.
Assured replacement cost
Opting for an assured replacement cost covers for the overall recovery cost even if it goes beyond the insurance policy limit. Although there is a certain limit to which the costs can be covered. Generally, insurance companies cover costs going above to about 20% to 25% of the net policy limit.
