Your home is your castle and you will want to insure it. Property insurance protects you in the event that your premises and its contents are damaged. And it also covers you in case someone is injured in your home and you’re deemed liable. As home is where the heart is, MoneyMindz, India’s First Financial Advisory Portal finds it important to make you aware of home insurance to protect your home from any crisis.
Is Home Insurance Required?
Home insurance is usually optional, allowing homeowners to choose their policy to fit their individual needs. However, individuals whose homes are under a mortgage loan are required by their lenders to obtain adequate coverage for the dwelling, as the lender has a vested interest in the home and wants assurance that any damages accrued by the home during disasters will be covered. Exact requirements vary based on the lender, the home’s geographic location, and the weather that frequently affects the area surrounding the home.
In addition, some homeowner’s associations require members to purchase a certain level of homeowner’s insurance, as the associations’ policies often do not cover the whole home. The level varies across associations, but usually includes the interior structure. A common phrase used to describe coverage is “studs in,” which means everything in the walls from the studs inward must be covered by insurance. Though it is a rare occurrence, some associations may require individuals to insure the whole building. The amount of coverage required will be covered in the association agreements.
Some geographical areas are more at risk for damage than others, and the insurance level required by lenders and associations will reflect the threats of the home’s location. Homeowners who live in areas where there are frequent earthquakes may need to purchase earthquake insurance. Homes located in areas where hurricanes are common may need to purchase a separate wind insurance policy. Whether or not you will be required to purchase additional coverage is dependent upon your location and the agreement between yourself and your lender and/or homeowner’s association.
Though flood insurance is not legally required in areas of high flooding, it is highly recommended for homeowners. Flood insurance is always considered a separate policy from standard homeowner’s insurance policies and therefore adds to the overall cost of coverage. However, flooding can happen anywhere, according to the National Flood Insurance Protection Program, and all homes can therefore benefit from flood coverage. That said, there are some homes that are considered higher risks for floods than others. Homes in high risk areas are especially in need of flood insurance.
How to choose a home insurance policy?
It’s important to calculate the amount of home insurance you need very carefully so that you don’t run the risk of being underinsured. Also read the policy disclosure statement (PDS) before choosing a policy, as terms and conditions of cover vary between insurers. It’s also important to check the cooling-off provisions so that you know how long you have to change your mind if your certificate of insurance for your policy doesn’t meet your expectations.
Smart Financial Adviser, Kuber Mindz advices that it is essential to have a good insurance policy on your home. This protects you from catastrophic losses such as those incurred by natural disasters. It will help protect you from lawsuits due to injury on your property and will protect your belongings from theft. To not have home insurance is taking a very high risk on your most valuable asset.
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