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Business News/ Money / Personal Finance/  A guide on home insurance for first time property buyers in India
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A guide on home insurance for first time property buyers in India

Home insurance is a form of insurance policy that offers financial security for your residence and personal items against losses brought on by property damage, such as coverage for liability, theft, or natural catastrophes.

Home is the most expensive asset one can invest in thus buying a home insurance becomes imperative to protect the wealth from damages due to natural calamities such as flood and cyclones, and man-made events, burglary etc.Premium
Home is the most expensive asset one can invest in thus buying a home insurance becomes imperative to protect the wealth from damages due to natural calamities such as flood and cyclones, and man-made events, burglary etc.

Home insurance is a form of insurance policy that offers financial security for your residence and personal items against losses brought on by property damage, such as coverage for liability, theft, or natural catastrophes. It is ideal to comprehend the many coverage alternatives available when buying a home insurance policy for your new home and comparing rates from several insurance companies will assist purchasers to get the best offer. So for first-time home buyers, here's a guide on home insurance that can allow them to make informed and confident decisions about their insurance policy. 

Rakesh Jain, CEO of Reliance General Insurance

Home is the most expensive asset one can invest in thus buying a home insurance becomes imperative to protect the wealth from damages due to natural calamities such as flood and cyclones, and man-made events, burglary etc. As a first-time homebuyer, the most important thing you need to decide is whether to opt for a basic policy or a package policy. For instance, while a basic policy protects your home from any loss against flood, a package policy offers protection against burglary, house breaking and breakdown of electrical equipment along with the features of a basic policy. 

It is critical to note that basic home insurance is very affordable, and the premium costs around Rs. 2 to 3 per day for an annual insurance value of 10 lakhs. While a package policy costs a bit more, it offers protection to a wide range of items and against several natural and man-made events. Moreover, in both cases, if you take the policy for a long-term, the premium per annum will be even cheaper as you will be eligible for a discount.

Amit Ganorkar, President & Chief Operating officer, Tata AIG General Insurance Company

For a first-time property buyer, obtaining home insurance may seem like an added expense, but it is essential to protect your valuable investment. It is not just about protecting one's physical assets, but also safeguarding their financial stability in the event of any unforeseen loss. While buying a property, one must be extra careful and have in-depth understanding of all the processes. Property buyers should not overlook home insurance which plays a crucial part to protect your home against unforeseen loss or damage.

It is also essential to determine the value of your property and belongings to ensure you have adequate coverage. Consider the cost to rebuild your home and replace your belongings in case of a total loss. Keep in mind that the market value of your property may differ from the cost to rebuild it.

Review and update your policy regularly: As a homeowner, it's important to review and update your home insurance policy regularly to ensure it still meets your needs. It is essential for property buyers to understand coverage, compare quotes from multiple insurers, and review policy regularly to ensure they have the right coverage as per their needs.

Tarun Mathur, Chief Business Officer - General Insurance, Policybazaar.com

Having adequate home insurance is no longer an option but a necessity. Considering the rise in natural disasters happening every now and then not just first-time property buyers but every homeowner should buy homeowner’s insurance. Buying home insurance will shield the homeowner’s house structure and its content like jewellery, gadgets, electrical appliances, etc. from unforeseen loss or damage due to natural or man-made disasters. 

When selecting the amount of coverage, an individual must be watchful about factors such as the location of the house (e.g. if the home is in an earthquake or flood-prone area), type of house structure (apartment, standalone plot, bungalow) and the value of belongings inside the house (number of white goods, and details of valuable jewellery). It is important to provide true information to assess the right coverage and select the most suitable plan. 

First-time property buyers must also be acquainted with the fact that the premium of the home insurance policy varies based on certain parameters, such as the structure type, age of the house, and even the cost of construction. It is advisable to couple your home insurance with relevant add-ons to make it more comprehensive so that your policy covers your overall requirements.

Anil Kumar Aggarwal, MD & CEO at Shriram General Insurance 

For a first-time home buyer, the property becomes his major investment in his life. A well planned insurance purchase will shield the property against any form of perils be it man – made or natural occurrence. The coverage offers a financial-proof to the insured from any unfortunate incidents that will otherwise lead to financial vulnerability .

It is critical for a first-time home buyer to choose the appropriate coverage, and it is highly recommended that one chooses a package policy that combines various covers under a single policy. For example, if your new home is in a seismic zone, you must consider earthquake coverage when choosing a policy. The package policy not only protects the property from fire and other perils, but it also covers burglary, personal accident, all risk for portable equipment, domestic appliance breakdown, and many other coverages as add-on optional products as per policy schedule. 

Shriram General Insurance’s Shri Home Care Insurance Policy is a comprehensive policy with flexible coverage options tailor-made for the property buyers.

Shrenik Siroya, CEO and Founder of Legend Siroya Realtors

Home loan insurance is an essential tool that provides first-time homebuyers with the peace of mind that their loved ones will not be burdened with the liability of repaying the home loan in case of the primary applicant's untimely demise. 

Since the primary applicant is often the main earning member of the family, this insurance can safeguard their financial future. Home loan insurance can be paid upfront or can be included in the EMI payments, which can be proportionate to the loan tenure, providing flexibility and convenience to the applicant."

Buying a home is one of the biggest investments you will make in your life, and it is important to protect it with the right insurance. Home insurance can provide financial protection against damages to your property and personal belongings caused by natural disasters, theft, and other unforeseen events. Here is a guide to home insurance for first property buyers:

-Understand the different types of home insurance: There are two main types of home insurance - building insurance and contents insurance. Building insurance covers damages to the physical structure of your home, while contents insurance covers damages to your personal belongings inside the home.
 
-Assess your insurance needs: Before buying home insurance, it is important to assess your insurance needs. Consider the value of your property, the cost of rebuilding, and the value of your personal belongings to determine the coverage you need.
 
-Compare insurance policies: It is important to compare insurance policies from different providers to find the right coverage at the best price. Look for policies that offer comprehensive coverage, including protection against natural disasters, theft, and other unforeseen events.
 
-Understand the exclusions and limitations: Make sure you understand the exclusions and limitations of your insurance policy. For example, some policies may not cover damages caused by floods or earthquakes.
 
-Consider additional coverage: Depending on your needs, you may want to consider additional coverage options, such as liability insurance, which provides protection against legal liability for damages caused to others on your property.
 
-Read the fine print: Make sure you read the terms and conditions of your insurance policy carefully, including any limitations and exclusions.
 
-Review your insurance regularly: It is important to review your insurance policy regularly and update it as necessary, especially if you make any significant changes to your property or personal belongings.

Hitesh Uppal, Head of Finance, Magicbricks

Acquiring a home is widely considered a significant milestone due to the considerable investment required. And obtaining the relevant home insurance is just as crucial to avoid potential financial and emotional setbacks. In India, there are two types of insurance policies available to homeowners: structure insurance and content insurance. 

Structure insurance safeguards against losses resulting from natural disasters that cause structural damage to the house, while content insurance covers losses or damage to household items such as furniture, jewelry, and electronics. However, the amount of coverage required varies depending on factors like location and type of residence. For instance, individuals owning homes in earthquake-prone regions would require different insurance coverage compared to those with a sea-facing property. 

Similarly, insurance requirements for a vacation home will differ from those of an apartment or plot. First-time property buyers should consider the coverage types, insurance provider, premium costs, deductibles, additional coverage options, policy limits, and customer service when selecting home insurance. It's important to weigh these factors carefully and choose a policy that meets their needs and budget.

Rahul M Mishra, Co-founder & Director, Policy Ensure

Securing your home and personal belongings is critical, and obtaining the right home insurance policy is a crucial aspect of that protection. It's essential to select a policy that adequately covers both the structure of your home and its contents while being transparent about the value of your assets to ensure sufficient coverage.

Consider add-ons such as natural calamity coverage and personal liability coverage, and research the insurance provider's reputation, customer service, and claims settlement record. Don't forget to keep all necessary documents safe and updated regularly to ensure your insurance coverage meets your changing needs.

When shopping for home insurance, compare policies from different providers and look for those that offer additional coverage options, bundling discounts, and excellent customer service. Investing in a suitable home insurance policy provides peace of mind, protecting your investment and ensuring financial stability for years to come.

Rajul Bhargava,General Insurance Professional

We have seen many natural calamities in the past few years, along with losses due to Fire and other perils.

At the same time, the cost of construction has risen. In such times, if there is a loss the person may have to shell out a huge amount out of his pocket and in major incidents may even have to pull out all savings or go for loans. 

Thus, to save ourselves from such situations it is important that we insure our property with home insurance, which will cover us from all Act of God Perils and unnatural fire, inundation and other such losses.

Today, insurance has become an important part while we purchase a property. 

There are various ways to insure our property through a single year or multi year policy or few package policies that cover property I.e the building along with the contents like furniture fixture, electrical, electronic and mechanical items.

Vikas Mahajan Director & Head-Finance & Compliance at GramCover

Home insurance is a type of insurance that covers different types of damages and losses that may occur to your property and personal items. It also includes liability insurance in case someone is hurt by your property. Having home insurance gives you peace of mind knowing that you will be financially protected in the event of an emergency. 

It is important to carefully consider your needs when purchasing home insurance. Think about the type of coverage you need, your budget, and the amount of your deductible. It's also important to compare quotes from different insurance companies to ensure you get the best coverage at the best price. Please note that insurers consider several factors when determining a quote. 

These include property location, home age and condition, property value, and credit rating. Understanding these factors can help you make informed decisions about coverage and ensure you get the best deal possible. Overall, home insurance is an essential investment for first-time homeowners. Knowing that you and your belongings are protected can give you financial security and peace of mind should the unforeseen happen.

Prof. Abhijit K. Chattoraj, Dean (SW); Professor & Chairperson of PGDM - (Insurance Business Management), Birla Institute of Management Technology (BIMTECH), Greater Noida

Caveat while going for Home Insurance

Most people buy their house by taking take a loan. The banker /financier wants the buyer to take a Home insurance policy on loans given by them. In most home insurance policies –in the material damage section –the value/ sum insured should be calculated on the carpet area of the house/flat multiplied by the present-day construction cost per square foot. 

A flat 20% value can be added to the amount as arrived above for common spaces, etc. This amount is often significantly less than the market cost of the house. Therefore, insurance at the value suggested above should be the basis, not the loan you took or the market price you paid as a buyer.

Ideally, every home buyer should opt for a ‘Loan Protector ‘ policy issued by a life and non–life insurer.

Mukesh Kumar, Founder & Mentor, M-Sanvi Real Estate

Home insurance is an essential aspect of homeownership that you should consider to protect your investment. Here is a guide to help you navigate the world of home insurance as a first-time buyer:

A) Understand the types of coverage: Home insurance typically offers coverage for the structure of your home, personal belongings, liability, and additional living expenses if you are unable to live in your home due to a covered event. Make sure you understand the different types of coverage available, and choose a policy that fits your needs.

B) Determine the value of your home: Your home insurance policy should cover the cost of rebuilding your home in the event of a total loss. To determine the value of your home, consider factors such as the size, age, location, and construction materials.

C) Shop around for insurance providers: It's important to compare policies and prices from different insurance providers. Look for providers who offer comprehensive coverage at competitive rates.

D) Consider bundling policies: You may be able to save money by bundling your home insurance policy with other types of insurance, such as auto insurance.

E) Understand your deductible: The deductible is the amount you will pay out of pocket before your insurance coverage kicks in. Choose a deductible that you can afford, and consider how it will affect your premiums.

F) Review your policy regularly: Your insurance needs may change over time, so it's important to review your policy regularly to ensure you have adequate coverage. If you make any significant changes to your home, such as renovations or additions, be sure to update your policy accordingly.

G) Ask for discounts: Many insurance providers offer discounts for things like home security systems, smoke detectors, and multiple policies. Ask your insurance provider about any discounts you may be eligible for.

Remember that home insurance is a valuable investment in your property and your peace of mind. Take the time to research your options and choose a policy that works for you."

Jaatin Suratwala, MD and Chairman, Suratwwala Business Group

Buying a home is an exciting and rewarding experience, but it can also be a complex and overwhelming process. As a first-time property buyer, one of the most important things you can do is protect your investment with the right home insurance policy. 

Home insurance can provide you with financial protection and peace of mind in the event of unexpected damage, theft, or loss to your property. It also protects the taken loan liability in case of the death of the borrower. However, it's important to understand that not all home insurance policies are created equal.

There are many different types of policies available, each with its own unique coverage options and limitations. As a first-time property buyer, it's important to work with a trusted insurance provider who can help you navigate the complex world of home insurance and find a policy that meets your unique needs and budget. This might include coverage for natural disasters such as floods or earthquakes, or for personal belongings such as jewellery or electronics. By taking the time to understand your options and work with a qualified insurance professional, you can ensure that your investment in your new home is protected and secure.

Realtor Kishore Reddy, CMD, MANA Projects. Pvt Ltd

When purchasing a home, it is important to consider the coverage options available for home insurance. First-time home buyers may get so engrossed in the excitement of buying a new home that they may ignore home insurance. As a first-time property buyer, it is important to choose a policy that meets your needs. Home insurance policies can cover a variety of aspects, such as property damage, theft, financial loss, fire, and many more. For example, you may want to consider coverage for natural disasters, theft, or liability.

It is also important to understand the different coverage options that exist. Actual cash value coverage pays out the current value of a property, while replacement cost coverage pays out the cost to replace the property. Comparing rates from different insurance providers can help buyers find the best deal. It's a good idea to research and compare rates from different insurance companies to find the best policy. 

You should also consider the reputation of insurance companies to ensure that you choose a reliable and trustworthy provider. Often insurance companies feed off people’s money and hence, one must be aware of such fraudulent organizations. By considering the ratings of insurance companies, first-time homebuyers can make informed and confident decisions about their insurance policy.

Hence, home insurance is an important long-term investment that fits both one’s coverage requirements and financial plan, and helps a first-time property buyer remain secure in the long-run.

Kaling Porwal, Managing Director, Downtown Lifespaces

Home insurance is one of the most important aspects of home ownership. It acts as a peace of mind facilitator that ensures the homebuyers financial stability in case of damage to the property or the possessions inside. There are two kinds of home insurance, one is for the structure and the other is for the possessions inside. Homebuyers need to assess the best balance for their specific needs. 

 

 

ABOUT THE AUTHOR
Vipul Das
Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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Updated: 14 Apr 2023, 05:49 PM IST
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