House insurance is a must these days. Our home is our biggest asset, our dream destination, our comfort zone, our safety armor. We must secure it by all means. Don’t we keep dogs to guard our homes at night and security guards to prevent thefts? We even install alarms and cameras to keep burglars away.
We pay premiums to cover for any natural disaster or fire. However, we need to ensure that we should not overpay in the insurance premiums in an effort to cover our homes. Usually, we get carried away with the thought of securing our home and sometimes get trapped in high premiums. Certain insurance companies also try to grab as much money as possible out of the customers’ pockets. We feel betrayed when something happens and we are compensated with a minimal sum of money… sometimes not enough.
Therefore, before we subscribe for a house insurance plan, we must do some homework so that we could get the right value of our home and calculate the right insurance premium amount. Let’s understand here how we could do that.
Usually we insure our homes when we purchase them. The premium is calculated on the price at the time of purchase. If you have been living in your home for a few years now, the market value must have changed and you would need to recalculate the insurance amount and the premium.
House insurance doesn’t include the land as the land is not destroyed neither burned. So while you are calculating premiums, identify the real cost of reconstruction and insure for a suitable amount.
Understand thoroughly what damages the policy covers. You should not take anything for granted, assuming it would obviously be covered. Ask explicitly what damages are covered and what the premium would be if you skipped a few things or added a few things. This will help you calculate the right premium amount.
Over time construction costs rise significantly compared to the cost you purchased your home at. Bricks, cement, iron/steel, labor costs could have become double or even triple if you purchased your home long ago. Keep reviewing the prevailing costs and accordingly calculate your house insurance cover. This way, you would be able to keep your home covered all the time and would save yourself from paying wrong premium amounts.
Admit the fact that your house insurance cover is not governed by the market value of your home. The insurance companies estimate the cover of the cost of reconstruction of the house in that region. So wherever you live, do not ignore your surroundings and the market value of your home while buying the cover and calculate the premium wisely.
Any amount may be less or sometimes more than the needed for your home cover. Therefore, keep calculating your coverage requirements and choose your cover accordingly.
I hope you find this information quite helpful and worthy to be considered when buying or renewing your house insurance. Please share more tips that you think could benefit us and help us keep our home safe paying a reasonable amount of money.