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Your home is your biggest property investment. It houses people and things that are most important to you. Most of us know all about how our homes work but are clueless about how our home insurance works. You can legally own a home without having insurance but that would be rather unwise, leaving your loved ones as well as your belongings open to the threat of disaster.
Home insurance generally covers three things: structure, belongings and liability. Structure refers to the building (roof, walls, stairs, and others). Home insurance typically covers fire, water from busted pipes, damage due to hailstorm, and others. Most insurance policies do not cover earthquakes and floods, and you have to buy a separate insurance for that.
Belongings refer to all things in your house, so insurance covers you from theft as well. It is useful to have a home inventory so that you know exactly what you have and how much they are worth. When it comes to belongings, you are insured up to a certain limit only. You may need a separate insurance for high-value items such as gold and jewelry.
Liability refers to accidents happening to others in your home premises. High-risk areas for such cases are the pool, trampoline, or even the stairs. Your home insurance protects you against law suits as well as takes care of the medical expenses of others. Most insurance policies also cover living expenses wherein in cases of an accident such as a fire or flooding from a broken pipeline, you may have to stay in a hotel.
Once you are clear about your needs and budget, work with an independent agent who can present suitable options. You can get a professional assessor to help you assess your risks, valuate your property, and suggest a suitable coverage. Ensure your coverage is large enough as building and labor costs are continually on the rise. If you make any additions, inform your insurance agent to increase the coverage. This may not increase your premium hugely, but will definitely buy you peace of mind. When buying the insurance, specifically ask for what it does not cover.
Remember, life is all about being prepared for the unexpected so as to your property investment.
• Home insurance, in general, covers the structure, belongings and liability
• Most insurance policies do not cover damage caused by natural disasters
• Ensure your insurance cover is large enough as building/labor costs are rising
Source: Dipshikha Mitra, Special to Properties