August 16, 2017

Top Tips For Choosing Home Insurance


A homeowners policy will mitigate the risk of loss from theft, fire or storm damage. Standard home insurance does not cover losses sustained from floods or earthquakes. Everyone in the same insurance class will pay comparable annual insurance premiums based on the perceived risk of loss. A given geographical area might present higher risks from damaging storms or wild fires, which can result in higher rates. Thousands of homeowners pay insurance premiums that are collected by the insurance company and used to pay claims when losses are sustained.

Significant losses will be offset by increased premiums in subsequent policy years. An individual policyholder cannot incur higher rates because of filing claims against the homeowner’s policy.

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While buying a home insurance policy, there are some points to remember:

1) Make sure that you understand the policy coverage, exceptions and exclusions. Include all your valuable belongings, your liability to others, your living expenses if you are forced out of the house.
Check if a disaster occurs, your policy must be able to help you rebuild your house.

2) Take an inventory of all your possessions. When you file for claim, two things need to be done ­ proof of ownership of the insured items and verify them. Insurance companies often advise their clients to video tape all their belongings and keep it in a safe away from home as proof.

3) The key point to remember is to check if the policy value is regularly updated. This will help cover various assets that might get added to your house as well as the rate of inflation. Also, ensure the amount of cover taken is realistic, especially if you have refurnished your home. The moment of truth of any insurance product is when the policyholder has to file a claim, and for the company, to pay the claim.

4) Look at service

No discount in the world will make up for slow claims processing, so find out as much as you can about a company's service before you sign on. Consumer Reports periodically publishes service ratings for large insurers. You can also ask a representative about a company's claims turn-around time; a shorter turn-around is an indication of better service.

5) Focus on financials

It's wise to look at the financial ratings of your home insurer. Ask the company for that information, or check out one of the financial ratings services on the Web.
An A rating or higher from Standard & Poor's or an AA ranking or better from Moody's Investor Service is a good indicator of strength. Weiss Ratings, the most independent of the ratings services, and arguably the most stringent, publishes a list of the currently weakest homeowners insurers.


An individual gets home insurance claim on the basis of the sum insured for the structure of the house that is based on the reinstatement value. Quite simply, it would be the reconstruction value for the structure that is determined by the construction cost. The reconstruction cost is based on two parameters, that are, builtup area of the house in sq ft and cost of construction at that location.

For the contents and valuables in the house, the sum insured is based on the market value. Market value would mean the present cost minus an allowance for depreciation. For jewellery, you would not have to deduct depreciation.



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