Home Insurance

Insurance

Home insurance covers the structure (building) and contents (furniture, electronics, valuables) against fire, flood, earthquake, theft, and other perils. Lenders require home insurance on mortgaged properties. Annual premium is very low (Rs 2,000-8,000 for Rs 50L coverage) relative to the risk protected.

In detail

Home insurance components:n1. Building/structure: covers repair/rebuilding cost if structure is damagedn2. Contents: furniture, electronics, appliances, clothingn3. Public liability: third party injury or property damage in your homennPremium examples:nRs 50L building coverage: Rs 1,500-3,000/yearnRs 50L building + Rs 10L contents: Rs 3,000-6,000/yearnRs 5L jewellery (scheduled): additional Rs 500-1,000nnImportant: home insurance covers the STRUCTURE, not market value of property. Insure for reconstruction cost (lower) not market value (higher).nnHome loans: bank requires building insurance as mandatory for loan duration.

Formula

Building sum insured = Constructed area x Construction cost per sqftnNot market value -- market value includes land and appreciation which insurance does not cover

Real-life example

🇮🇳 India example

Rajesh has Rs 80L flat (Rs 30L land value, Rs 50L construction value). He should insure for Rs 50L (reconstruction cost), not Rs 80L. Insuring for Rs 80L is over-insurance -- insurance company won't pay land cost. Annual premium for Rs 50L cover: Rs 2,800. He also insures Rs 8L contents (electronics, appliances): Rs 1,200 additional. Total premium: Rs 4,000/year for Rs 58L coverage.

Frequently asked questions

Is home insurance mandatory if I don't have a home loan? ▼

Not legally mandatory without a loan. But practically essential: a single fire or flood can destroy what takes decades to build. Rs 4,000-8,000 premium per year for Rs 50-75L coverage is one of the highest value-for-money insurance purchases available. Every property owner should have it regardless of loan status.