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Home Insurance: An Expensive Proposition?

Submitted by admin on February 13th, 2024

Buying a house is the biggest investment for all middle-class families. Working hard, saving pennies, sacrificing luxury or even comfort – all these we do to buy a nest that we can call our own, our home. Hence, buying a house is not just about making an investment; it is a reflection of our emotions and expectations.

An overwhelming sense of safety, comfort and happiness makes our houses a stand-apart place from the world’s most expensive villa. From house to home – the transformation is quite fascinating for investors. The kind of attachment owners have with their home leads to a useful topic – home insurance.

Importance of Home Insurance

As a home is a costly investment, hence, owners will not mind bearing additional expenses for its safety and security. A home is where you live with your loved ones and have your valuable assets. All these are vulnerable to different types of disasters including theft, fire, burglary, strikes, and riots among others. The best way to protect your home against all these dangers is to buy an insurance product.

Unfortunately, many homeowners consider home insurance an expensive purchase and hence, avoid it. Is it really so? Or, these people make a huge mistake by not buying a home insurance product. Let us inspect their doubts and deep-seated notion regarding a home insurance policy.

Home Insurance & Its Pricing: What You Need to Know

The cost of home insurance is subject to a range of factors. For those who do not know, a home insurance policy provides essential coverage against possible natural and man-made disasters. In the event of any such disaster, it provides the policy owners with financial compensation.

The cost of a home insurance policy depends on the type of plan you pay for. No one-fits-all-size concept works here. Every insurance policy clearly mentions terms and conditions. The maximum amount a policyholder may receive after making a claim in the event of any disaster mentioned in the policy is based on any of two possible aspects – reinstatement value basis and market value basis.

Reinstatement Value Basis: It refers to the value for replacing a particular coverage with another one of same make and type. The insurer may consider depreciation in this case.

Market Value Basis: This value is obtained after subtracting the deprecation from the reinstatement value, depending on the age of the insured person.

The amount of premium you pay for your home insurance plan is a subject to the sum insured. The total sum is calculated on the basis of overall property value and asset under insurance coverage. Other factors can also play a role in determining the premium amount, depending on the underwriting principles by the insurer.

Home Insurance: Worth the Expenses

Now you have got an insight into what determines the amount of premium, here are a few advantages of buying a home insurance policy.

• It provides a protection firewall against your investment in home and other assets.
• It compensates you in case any damage happens to your property and other assets. However, the type of damages that you will seek compensation against should be explicitly mentioned in the policy.
• It provides personal liability and personal insurance coverage

Above all, with a home insurance policy, you will always have peace of mind.