India has a culture that respects the importance of owning and maintaining a house, but unfortunately home insurance hasn’t been a big priority of Indian households so far. Home insurance plans make up only around 1% of the total insurance industry in India, despite providing much needed coverage from natural and man-made calamities, burglary, and theft, which are common occurrences that are financially very draining. Home insurance can be bought by homeowners and tenants as well, who can opt for contents-only home insurance. However, before choosing a home insurance plan, we must look into the type of coverages offered by home insurance:
Types of home insurance coverages in India
Fire & Allied Perils
Offered in all home insurance plans, this type of coverage insures the policyholder from damage caused by natural calamities such as fire, flood, earthquakes, cyclones etc. It also covers damages caused by strikes and riots, and terrorism cover is included in some home insurance plans, while others offer it as an add-on option. The sum insured is decided using the cost of reconstruction, which is calculated by the value of the built-up area and the construction cost.
Home Structure/Building Insurance
Home structure insurance protects the structure of your house from damage caused by natural and man-made calamities. This type of coverage extends to permanent fixtures in the house, such as bathroom and kitchen fittings. Most home structure insurance plans also cover additional structures such as sheds, garages etc. under the same plan.
Burglary & Theft
This type of coverage covers declared contents inside your home from loss due to burglary and theft. It is a very beneficial cover that helps protect your household from the dangers of robbery.
Public Liability Coverage
This coverage covers legal liabilities arising from damage to any third-party, such as guests or servants, caused inside the policyholder’s home.
Personal Accident Cover
This cover entitles the policyholder to compensation in case of permanent disablement or death of the insured person(s). A great advantage of having this add-on cover is that the home insurance company is liable to pay compensation for accidents that occur in any part of the world, and is not restricted to accidents occurring inside one’s home.
Contents/Tenant’s Insurance
Contents insurance covers all the contents inside the house from damage caused by fire & allied perils, as well as burglary and theft. Contents often include all furniture and domestic appliances such as TV, refrigerator etc. This is also known as tenant’s insurance, as tenants need not opt for structure/buildings cover and can protect all their valuables at a lower premium with contents insurance.
With so many types of coverage options and home insurance plans available, how does one choose the right home insurance plan that suits their requirements? Does one focus on the premium and claim settlement ratio, or on the availability of beneficial add-ons?
Here are our tips to help you get the best home insurance plan in India 2021:
Compare premium and claim settlement ratio
Home insurance is generally a long-term product, hence it is wise to compare premiums using sites such as policybazaar and bankbazaar to find the companies that offer the lowest premium for home insurance. Another important factor is the insurance company’s claim settlement ratio. Since home insurance is currently a very small insurance segment in India, one can look at a general insurance company’s claim settlement ratio in other types of insurance, such as health, life and car insurance to get an idea regarding the company’s claim settlement efficiency. One must also check the claim settlement duration and the availability of an online claim settlement service for home insurance.
Compare the size of the deductible
Deductible refers to the amount the homeowner has to pay by themselves when filing for a claim. Hence, the total payout of the home insurance in case of any event would be the loss minus the deductible. Opting for a higher deductible can reduce your premium significantly, however, you must also ensure you have enough funds available to pay for the deductible amount when the situation arises for you to file a claim.
Choose the company with the best customer service
In the event of a natural or man-made calamity damaging your home, it is very important for your home insurance company to be proactive and provide you quick and efficient customer service for hassle-free claim settlement, so that you can return to your normal life as soon as possible. One must check feedback of other policyholders regarding the company’s claim settlement service to get an idea regarding its claim processing and customer service. To help you with your search for the best home insurance provider, we provide you with a list of the 7 best home insurance companies in India 2021.
Choose a policy according to your coverage requirements
Before choosing a home insurance plan, one must decide what type of coverage they need. For example, in an area with a high crime rate, having a burglary and theft cover is an absolute must to protect your valuables. Tenants can opt for contents only insurance, as it would protect all their possessions with a lower premium than a full home insurance plan. One must choose a policy that has the appropriate covers according to their requirements and matches with their financial needs.
Look for comprehensive plans and availability of add-ons
There are many coverages in home insurance that exist as add-ons in some plans but are already included in others. For example, Bharti AXA and United India include public liability coverage in their standard home insurance policy, whereas other providers offer it as an add-on. Some insurance companies such as New India Assurance and United India allow customers to choose from multiple coverage options as per their own needs, such as from fire & allied perils, burglary/theft, baggage insurance etc. Such plans provide comprehensive protection to their policyholders and match their home insurance requirements.
In summary, these are the points to keep in mind when looking for the right home insurance plan in India 2021. One must not only compare premiums, but also focus on the company’s claim settlement ratio, process and duration, as well as on the coverages offered within the home insurance plan and whether they meet your requirements or not. We hope this article helped you gain clarity regarding choosing the best home insurance plan in India 2021. If you liked this article, please share and comment below.