Have you ever wondered which is worse?
A devastating earthquake or picking up the pieces of life after surviving
such an earthquake?
Perhaps the second one requires more resilience and determination. It also
requires the hand of providence and of-course good planning habits.
It would be a shattering to see one's home crumbling in front of their eyes
and would be all the more depressing if the house is not insured.
There are certain myths with regards to home insurance and through this
article, we attempt to de-construct such myths:
Myth # 1: Home Insurance does not cover hand-of-God incidents:
It is a general feeling that home insurance does not cover natural
disasters. However, mishaps like fire, earthquake, flood and other perils are
amply covered in the first section of most home insurance policies. In most of
the plans this is a mandatory coverage.
In order to understand what is covered under the policy, it is important to
read the policy documents carefully. Only after considering the terms of the
policy in detail should one commit to purchase the policy.
It is a fact that some insurance companies may cover a particular form of
natural disaster while others might not do it. It is always a good practice to
compare different policies before buying one.
Myth # 2: Settlement of claims is a cumbersome process:
Many people shy away from buying a home policy simply because they feel
that the claim lodging and settlement process is innately cumbersome. Actually
it is not that intimidating and just need to follow a particular procedure.
When the property of the insured is damaged due to some calamity,
intimation has to be given to the particular insuring company as early as
possible, either to the local office or the main office as per the stipulations
in the policy.
The insurer on its part will send an agent to survey the extent of damage
to the policyholder's property. Once the agent files the report, decision is
taken regarding the value of the claim that is permissible as per the policy.
The insurer might ask for certain documents from the insured before they
finally go about the process of settling the claim.
With the gradual and progressive improvement in technology a lot off ease
has come about in the process of storage of policy documents. Now policy
documents can be stored in Dematerialized or electronic format also. This helps
in case where the original policy has been misplaced or lost and in such
situations the only question that the insurer asks is the date when the policy
was taken.
Myth # 3: Low Insurance Premium means Low Insurance Coverage
Insurance coverage for homes and premium amount payable are not always
directly proportional. If the home to be insured is already equipped with such
safety devices as fire alarm, and burglar alarms, it is likely that the insurer
will offer discounts on the premium.
Judicious decisions while buying a policy will help in keeping the premium
cost low. For example in areas, which are clam and peaceful a cover for riot
and terrorism might not be required at all.
As these natural calamities are not very frequent, the risk for the insurer
is low. So the premium will be obviously low.
Myth # 4: It is necessary to own the home for having it insured
It is often that people are under the impression that in order to insure
their place of residence, they need to own it. This is not true.
The house owner can insure the basic structure of the house that he is
renting out.
A tenant can always insure the belongings in the house they are residing
in. If they happen to change homes, the insurer can approve the change of
address.
Myth # 5: Burglary is not covered
Home insurance policies cover not only damage caused by natural disasters
but also damage or loss caused by robbers burgling the house or even attempting
to burgle it.
Individual items of value like pieces of jewelry, documents, gadgets and
fittings can all be insured. However, discretion may be used to insure only the
valuables, else the premium will be substantially high.
Conclusion:
While buying an insurance policy it is imperative that the policy document
is studied thoroughly.Clarifications may be sought in case it is felt that
there is any ambiguity in the policy clause. With online policy buying becoming
simple, it is an easy to compare the various policies online before taking a
final call.
The author is Ramalingam K, an MBA (Finance) and Certified Financial
Planner. He is the Director and Chief Financial Planner of Holistic Investment
Planners http://www.holisticinvestment.in a firm that
offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in
Article Source: https://EzineArticles.com/expert/Ramalingam_K/2430606
