Protecting your dream home costs more dearer than building it. This saying is true, especially if you consider the current risks and perils. Many a times nature plays a truant, damaging property and all belongings. Otherwise mis-happenings, accidents, thefts and unfortunate circumstances can cause unforeseen damages to your dream home.

This is where home insurance comes into the picture. Home insurance covers property and its contents against any unforeseen risks and happenings. Practically speaking, it is the best way - and perhaps the only guarantee – for a home owner to recover his mortgage losses. Home insurance becomes very crucial in circumstances when mortgage losses are excruciatingly high and the home owner is not in a position to recoup such losses. This is when home insurance acts like a life-line in securing the monetary value of property and its belongings.

Home insurance can be considered to be a token amount in lieu of the benefits that it provides. In fact the government is considering to make it mandatory for new home loan seekers to opt for home insurance.

Most banks and Housing Finance Institutions (HFI) offer home loan policies. Home insurance policies generally cover the building structure and contents inside the home. There are a handful of policies that cater to special segments in mortgage insurance or offer special packages on select home items.

Buildings Insurance:
1. The Fire and Special Perils Cover -
This is a comprehensive packaged cover that covers damages to the structure of home due to –
• Fire
• Storm, tempest, flood & inundation
• Riot, strike & malicious damage
• Lightning
• Explosion & implosion
• Aircraft damage
• Damage due to impact by vehicles
• Subsidence, landslides and rock slides
• Bursting and/or overflowing of water tanks, apparatus and pipes
• Missile testing operation
• Leakage from automatic Sprinkler installations
• Bush fire

2. Earthquake Cover: Covers damages to the structure of your house due to earthquake

3. Terrorism Cover: Covers damages to the structure of your house due to acts of terrorism

It should be noted that home insurance does not cover the market value of the property. The price of the home includes the cost of the land and the cost of constructing the building structure only. The insurance cover is only for the cost of constructing the building. The sum insured is calculated by multiplying your home area by the construction rate per sq. feet.

Content Insurance:
Content insurance offers protection against various perils including:
• Fires
• Storms/flooding
• Explosions
• Theft and vandalism
• Valuables such as jewellery, cameras and watches against all risks,
• Cover against all kinds of accidental breakage of plate glass fixed in doors and window frames.
• Loss/damage to domestic appliances due to electrical and mechanical breakdown.

Quick tips for home insurance:

•  Home insurance cover is not the same from one company to another. Always compare various offers being made to you.
• As a home owner, insurance can be expensive if you buy it from your mortgage provider just as holiday insurance may be expensive if you buy it from a travel agent.
• Make sure you choose a home insurance company with a good reputation. If you do need to make a claim on your home insurance cover, it is often at a stressful time, following a fire, burglary or other difficult event. The last thing you need is for your home owner insurance company to be unhelpful.

 courtesy:magicbricks.com