Your Essential Guide to Home Insurance

Calculation of Home Insurance Premium

Your home is undoubtedly your castle! Besides a major chunk of your financial assets, your dreams and aspirations are also additional investments in the deal. So it becomes mandatory to protect this heavenly abode from any stray mishaps.

The mishap could be a natural catastrophe such as fire or earthquake, or human-made like burglary. Either way you need to protect your property and valuable possessions from damage and cater for repairs.

Types of Home Insurances

Types of Home Insurances

There are essentially two types of home insurances: Buildings Insurance and Content Cover.

Buildings Insurance
  • This category includes the basic infrastructure of your house like the walls, roof and windows. This insurance cover also encompasses the permanent fixtures in the house such as fittings in the bathrooms and kitchen.
  • While estimating the amount of the buildings insurance cover ensure you calculate an accurate rebuilding cost figure to avoid an insurance deficit and a fat bill!
Content Cover
  • Your house is not just about bricks and cemented walls. This domain houses an enormous inventory of expensive possessions. Ranging from your clothes to furniture to electronic gadgets – it could all aggregate to a colossal amount.
  • Give detailed information to your insurer to avoid invalidation of policy.
Risks Covered by Home Insurance

Risks Covered by Home Insurance

  • Burglary
  • Damage by wild animals like monkeys and baboons
Calculation of Home Insurance Premium
  1. The age and condition of your home is taken into account. The older the home, the high the premium.
  2. Brick houses have lower premiums in comparison to wood houses as the risk of fire is much lesser in the former case.
  3. The proximity of your abode to the fire station also plays a vital role in the calculation of premiums.
  4. The same goes for the history of neighbourhood claims. This assists the provider in ascertaining the risk quotient in the area.
  5. The presence of a wood furnace or stove is also taken into account to access the premium.
Monitor the property taxes in that area-
  1. If your house includes luxuries like swimming pool or trampoline, be prepared to pay a higher premium as these amenities translate to higher injury risk.
  2. Your darling pet also plays a significant role in the calculations. Aggressive dogs are seen as threats to people residing on the property.
  3. Finally, the most important factor is the cost of rebuilding the property. Replacement cost varies from the market value of the property. The factor must be determined by you and the provider in conjugation.

The term ‘Home Insurance’ may not excite you but remember it is essential.  It may be prudent to gain ample insight prior to taking the plunge. Remember under-insuring your dream house can be devastating!

In the event of a claim, you obviously do not want the insurer to refuse payment. This makes it pertinent for you to be open and frank with regards to details of your inventory.

While deciding on the policy to be taken, don’t let price be the only consideration. Pay attention to the terms and conditions especially those pertaining to the excess. With these pointers in mind, you will surely zero down on a comprehensive policy with a trustworthy provider!