The world of insurance is complex, and so is the case with home insurance. Owing to several myths and misconceptions regarding home insurance, homeowners in India are reluctant to buy it.
Homeowner's insurance is one of the most common types of insurance and one of the least understood. Many homeowners believe that their policies will cover them for practically any damage sustained to the house or contents. The reality is that homeowner's policies contain many exclusions and restrictions on coverage that can leave you with a coverage gap. Here are five common myths about homeowner's insurance.
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1# Myth: Unusable Coverage:
If your house is damaged beyond repair or is impossible to inhabit at the moment while it is being renovated, it is possible that your insurance provider will accommodate you in a hotel or service apartment temporarily. But this is not true for all #house_insurance plans and if you end up shelling out for all these expenses, you will soon be in huge financial trouble. Please go through the plan carefully and see to what extent the insurer will support you and for how long.
2# Myth: Expenses to restore/ replace/ renovate:
Many tend to take it as a given that expenditures to replace your lost or destroyed belongings in the house. For instance, you may think that your three year old washing machine damaged in fire or burgled, it will be replaced as per the coverage. But did you know that a bulk of insurance schemes do not have this option at all. If not incorporated, losses will be gauged at what the item was worth right before the accident. And evidently you will have to cut your losses and settle for the current depreciated value, which will be nowhere near the price for a new one.
3# Myth: About Flood Protection:
Practically every home insurance plan omit coverage against flood coverage, along with quakes and other natural catastrophes. This is unfortunate as it is one of the most common causes for deterioration of your house as well as ruining of contents. Floods can occur due to several reasons, such as a storm, ruptured pipes or drainage stoppage. Only a few firms include flood cover in their scheme. And if you are residing in a vulnerable region, it would be a good idea to go for a distinct flood plan or rider on additional premium.
4# Myth: To lower your insurance premium, you have to lower coverage.
Reducing your insurance coverage in order to save on your premium is a bad idea. You should always be adequately insured. To keep your premium low, learn what options you qualify for that might lower your premium. For example, you can increase the deductible or install a burglar alarm system.
5# Myth: Dwelling coverage amount is based on the purchase price of your home.
Your dwelling coverage should be based on the replacement cost of your home. It doesn't need to include the land part of your property. Replacement cost is usually calculated by multiplying the square footage of the home by current local construction costs.
6# Myth: You cannot buy a home without buying home insurance.
If you have a mortgage most lenders may require you to purchase home insurance, but it is usually up to the homeowner to get proper insurance.
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