A cover for your largest financial investment

Yes, you have just purchased your dream home and decked it up with all the goodies. But what happens, if there was a robbery or fire? A householder’s policy will come handy in such situations.

So, while you buy cover as a hedge against all perceivable risks like health, critical illness and life, of you and your family members, it’s also important to take cover for your residence. And, what if something goes wrong with your house, where you have invested not only your major financial wealth but also emotional wealth? You have to safeguard it against any eventuality and, as goes the saying, misfortunes do not come alone.

Your home is one of your largest financial investments. That's why it's so important to protect it. Home Insurance, or householder insurance as it is also known, is one of the most important policies you should go for. Be it a hut or a bungalow, rented or owned, it is advisable to insure your house and belongings to guard against unforeseen risks.

The household goods and personal belongings represent many years of financial and emotional investment for your family. All these may be lost due to theft or natural calamities, like an earthquake, floods, short circuit or fire. Unfortunately, if anything like that occurs, the worry about losing your property and setting up all the things all over again will cause much agony.

In addition to protecting your home, the typical home insurance covers your valuable personal property as well. That is, the contents like furniture, clothing, stereo, computer equipment, jewelry, etc. Here, the premium is payable annually.

Insurance covers against natural calamities, such as fire, lightning, earthquake, landslide, rockslide, flood, inundation, storm, tempest, typhoon, hurricane, tornado or cyclone. Also, manmade calamities like damage caused by aircraft, riots, strikes, malicious or terrorist acts, domestic gas explosions, overflow and bursting of water tank or pipes, and other risk cover, too.

Personal property like furniture, clothing, electronic gadgetry and outdoor items like sports gear and gardening tools are also included in the coverage. Property insurance protects your home, any structures attached to your dwelling, as well as other tools like sheds, indoor pools, etc.

In such cases, your insurance company will take care of the losses and indemnify you for it.

Some policies insure at actual cost of the property, while others do it at the replacement cost. Unless the policy specifically states that property is covered for its replacement value, coverage is for actual cash value.

Riders are also available with these policies, which give you add-ons like terrorism cover which takes care of damages and losses to the structure and/or contents of your home due to acts of terrorism. Also, if forced to shift because your home is destroyed or damaged by any insured peril, the policy will cover you against the additional rent.

And, it is also important to know that what all it doesn't cover, the exclusions. And like in every insurance policy, there are a large number of them in the case of householder’s insurance policy. Damages done due to wilful destruction of property, loss, damage and destruction caused by war, wear and tear, atmospheric conditions, losses if your home has been unoccupied for more than 30 days, cash, bullion, painting, works of art and antiques and loss to the structure and/or contents of your home due to acts of terrorism are not covered.

Now that you are ready to insure your home, do account for every factor, big or small, not just the premium alone. Most important, get quotes from various companies and then decide.

The author is VP (Personal Finance), ApnaPaisa.com