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Why is it important to insure your home


A home in Louisiana damaged by Hurricane Katrina

 

It is every common man’s dream to own a house of his own, and when it happens it not only becomes one of the biggest investments in terms of money, but also one of the most prized possessions.

We put in a lot of time and effort to do up our house- appoint an interior designer, spend on buying the latest electronic gadgets, furniture and upholstery. While we do try and protect our homes by installing fire and burglar alarms, cameras and sophisticated locks and bolts, it is not sufficient to ensure the safekeeping of your precious dwelling, not only from fire, theft and burglary but also from bigger perils like earthquakes, floods and other natural calamities. Consider this –

  • The Gujarat earthquake of 2001 destroyed 3.5 lakh homes and left 6 lakh people homeless.
  • The tsunami in 2004 destroyed/damaged 1.5 lakh homes in India alone.
  • The 2005 Mumbai floods damaged around 1.75 lakh houses.
  • Lakhs of homes all around the globe have been damaged by calamities like hurricane Katrina, hurricane Sandy etc.

A large section of the unfortunate ones who were impacted by these are yet to recover fully – both financially and emotionally. All this could have been avoided if they had the foresight to insure their homes by paying a nominal premium – which is as less as around Rs 5,000/- a year for a comprehensive all inclusive cover of Rs 25 Lakh. This is only a miniscule fraction of the money we all must have spent on doing up our homes!

Home insurance is a not a very well known product. This is mainly because the premiums charged to the insured are low and hence it is not very remunerative to the insurance agents compared to the effort. The percentage of people taking a stand alone home insurance is very less; in most cases it is offered as a bundled product whenever one opts for a home loan.

Hope this was an eye opener for all those who haven’t insured their homes yet. In the next post, we will discuss the various types of home insurance available and the things to be kept in mind before taking one.

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