Five home insurance myths you will regret buying into

Published FEBRUARY 16, 2015

Home insurance is not something that appears at the top of the shopping list. Also there are many misconceptions about home insurance. Here are five myths that can adversely affect your home insurance buying decision.

You have a home loan, home loan cover, sufficient life insurance covers, auto insurance and a few more; but when your home loan lender insists on home insurance you think of raising a complaint against the bank for forced cross selling. But you realize later that you were wrong!

In general, the financial lenders need the borrowers to go for home insurance coverage, to shield their investments, because in case the property is destructed, the banks or financial institutions tend to suffer a huge loss of money. But we will realize its importance only when we are faced with a situation. So in case you plan to invest in home insurance and spend hours wondering about the restrictions or exclusions, read this before you take the plunge.

Here are the top five common myths, pertaining to homeowner’s insurance at a glance:

MYTH 1: External or Internal Damage Caused by Natural Disasters are Covered With Your Insurer:
Even today, many homeowners tend to believe that the insurance policy is supposed to cover any form of damage pertaining to the property as well as the contents; and this is exactly why many people find themselves in grave danger whenever they encounter an unanticipated loss or damage!

In case your house is affected by fire, lightening or ravaging, the insurer compensates the damage, in order to get the house repaired and rebuilt. However, if you want to ensure protection for your house, from flood, earthquake or poor maintenance of the home, then you might require different riders.

MYTH 2: Damage of Personal Belongings is not Covered By Your Policy:
It is more essential to protect your existing assets, rather than creating new assets! Even if you haven’t purchased a different floater policy, insuring your personal belongings with its full appraisal value, most of the valuable personal belongings such as clothes, electronic appliances, furniture and jewelry are covered by your insurer, in case they are damaged or lost due to the natural disasters. Some of the insurers, even offer coverage, off the premises which ensure you reimbursement of a damaged or lost item, even if you are away from home; but, keep in mind, that there is a restriction on the number of times, you will account for in the reimbursement.

MYTH 3: If you have Home Insurance you do not need Life Insurance :
In India, majority of us are not very eager to protect ourselves through sufficient insurance coverage. Unfortunately, being a house owner and responsible for repaying the home loan, if you avoid ensuring sufficient life insurance, it can be highly difficult for your family members to retain the property in case of any mishap.
It is vital to note that, even if the homeowner suffers from tremendous misfortune before repaying back the loan, the bank might organize an auction for recovering the remaining amount. With proper life insurance, the property can be easily retained with the aid of the insurance amount.

MYTH 4: An Instantaneous Decision Can Improve Your Life:
Researchers suggest that, even professional experts tend to fail often when they have to make an instant decision. Avoid being hasty, influenced by known people, or spontaneous, while deciding your insurance policy. Make a good comparison before you zero down on the product.

MYTH 5: What my agent tells is right:
There are many people, who might end up taking a policy simply for the sake of satisfying their age old friend or relatives, who work as insurance brokers or agents. This will not help you in crisis management. Assess your needs personally and make sure that the coverage suggested by the agent is more or less.

These days, the online insurance plans make it all the more convenient and wallet-friendly for a policy maker, rather than investing through the insurance agents. By developing a clear perception about your home insurance and overcoming these false notions, you can easily create a valuable proposition for yourself and your family, in the long run.