Home Insurance - A Must For People

 Home Insurance - A Must For People

Home insurance is a contract between an insurance company and the owner of the home to cover certain types of damage to the property and its contents, theft of personal possessions, and liability in case of lawsuits based on incidents or events that occur on the property.

This is most important form of insurance after Life insurance because people generally make their biggest investment in home. It is not just about money but also about emotional attachment to the property. Hence, it is extremely important for people to protect their home and its belongings from loss or destruction by taking up home insurance.

Home insurance provides compensation for damage or destruction of a home from disasters. In some geographical areas, the standard insurances exclude certain types of disasters, like flood and earthquakes that require additional coverage. Special insurance can be purchased for these possibilities, including flood insurance and earthquake insurance. Insurance must be updated to the present and existing value at whatever inflation up or down, and an appraisal paid by the insurance company will be added on to the policy premium. Fire insurance will require a special premium charge, plus the addition of smoke detectors and on site fire suppression systems to qualify. Maintenance-related problems are the homeowners' accountability. The policy might include inventory, or this can be bought as a separate policy, particularly for people who rent housing.

A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of health insurance for medical expenses of guests who are injured on the owner's property. 7)HOME loan borrowers should ensure that their debt do not continue beyond their death. One option is to buy term insurance or regular premium term insurance for a tenure at least equal to the loan tenure and for a sum that equates the loan amount. The other option is a mortgage reducing term insurance (MRTI) on group life insurance platform. The cover offered falls each month in line with the reducing principal amount outstanding after every EMI is paid. In other words, the cover reduces as the borrower goes on repaying the loan. In case of eventuality, the insurer pays off the sum assured at the time of death of the borrower to the bank and settles the loan.

The good part for those with home loans who do not have this cover is that one can opt for an MRTI in the currency of the loan if he is not bought at the inception of the loan. The sum insured reduces as the outstanding loan reduces. If money is left after paying for the loan outstanding, the bank pays the money to the borrower's nominee. This is possible in loan part pre-payment cases. But a point to note is that the cover ceases as the loan comes to an end.

Some insurers offer additional benefit of total and permanent disability though at an extra cost. Though such additional benefits carry a set of exclusions and a provision of waiting period, they enhance the insurance solutions. The key benefit of MRTI on group life platform is the concept that the borrower need not undergo medical test if he satisfies certain norms in terms of sum assured required, age, occupation and level of education attained. Of course this benefit is subject to signing a good health declaration (GHD). Here the product covers over a term insurance product in terms of ease of purchase.

"In case of claim settlement, the banker has a helping hand as the banker is an interested party. The claim settlement is faster in group products than in the individual life products," said a senior executive with a private sector bank.

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