Continuing on the topic of home insurance (See prev. post – Why is it important to buy a home insurance) –

Buy a comprehensive home insurance policy, if you can afford to.

Comprehensive policies are slightly expensive, but cover almost everything – the structure and the contents from all perceivable perils like fire, burglary and theft, earthquake, riots, flood and inundation etc. Over and above this, optional covers like a terrorism cover or a third party liability is also available for an extra fee. Of course, one always has the option of opting for a basic policy with the optional add-ons.

Insure your home at the “replacement value” and not the “actual cost”.

Though most insurance companies insure the structure for its reinstatement value and the contents for its market value by default, it is important that you make sure of it. Insuring something for the actual cost factors in depreciation too, and the amount of insurance will not be enough to replace the item if it is damaged or lost.

Do not under insure or over insure.

Make sure to insure your home for the correct value. If you under insure your home for less than its replacement cost, in the event of a damage or loss, the sum covered by the insurance will not suffice to replace  it. Over insuring, on the other hand would mean one is paying excess premium, as the insurance company will only reimburse to the extent of the amount required for re-instatement.

Opt for longer term policies as they are cheaper.

Home insurance policies are available for up to 5 years, and in some cases for 10 years too. The longer the policy term, the lesser would be the annual premium.

A tenant can take a home insurance cover too.

Most people who live on rent or lease do not buy a home insurance, since they do not own the house they live in. But it is important that they insure the valuables and the contents of their house which they own.

Compare products before you buy.

There are umpteen public and private sector general insurance companies in India today offering home insurance. It is advisable to compare their product features and premiums before buying. There are many online websites which facilitate such comparisons. A few of them are:

www.policybazaar.com , www.myinsuranceclub.com , www.easyinsuranceindia.com

Last but not the least, read your policy document carefully.

A home insurance is a legal contract between you and the insurer. Make sure you read and understand the policy document carefully – the inclusions, exclusions and the restrictive clauses. Do not hesitate to call up your agent or Insurance company in case of any doubts or clarifications.