If you have a home of your own, then you need home insurance. We all want to protect and insure our precious homes and cover a range of expected and unexpected costs. Home insurance plans include both man-made and natural disasters, including calamities such as earthquakes, tsunamis, cyclones, and so on. However, before you buy home insurance, you need to be aware of certain common but important home insurance terms, to help you study the policy in detail before choosing one.
Here are some home insurance terms you should know about before you go ahead and sign on the policy document.
1. Sum Assured
Sum assured of your home insurance policy is the maximum amount that the insurance company will pay in case of damage or destruction to your property. It is always advisable to avail a substantial amount of insurance cover that will help reimburse the cost in case of a contingency.
2. Reinstatement and Market Value
The two methods on which the insurance companies assess the loss for the insured are reinstatement and market value. Under the reinstatement method, the insurer determines the cost required to rebuild the house at the time of the damage. It is used to measure the value of the structure of your home. The market value method, on the other hand, adjusts the depreciation from the current cost while calculating the price and is used to insure the contents of your home.
3. Right to Inspect
The right to inspect refers to the right held by the insurance company to inspect damaged premises. It is important because if there is a denial to get the property inspected, it can lead to rejected claims. To process the claim, the company needs submitted reports; therefore one needs to be cooperative when the company’s surveyor or an agent comes to visit the property to assess the damage and gauge the extent of the same – either to the structure or its contents.
4. Fraudulent Claims
As the name suggests, a fraudulent claim is a false claim in which the insured tries to avail some compensation under the policy or attempts to benefit somebody else by unlawful means. This term supports the Duty of Disclosure aspect of the policy. For obvious reasons, such false claims are not supported or substantiated by the insurance company.
5. Scope of Cover
The scope of cover in your home insurance dictates the various damages that are covered by your insurer. One must ensure to read the policy document carefully before availing the policy as it will influence your purchase decision. Having a clear idea of what is included under your policy coverage will not lead to rejected claims. Moreover, the scope of cover can be modified to include additional items like the furnishing in your house at the time of insurance renewal for an additional premium. Make sure you make use of a home insurance premium calculator to compare and get the best coverage for your nest. In the end, all you need is financial relief in times of crises.
6. Burglary and Theft
This is a tricky term. You might think that the words have similar meanings, but when it comes to home insurance, they do not mean the same. Burglary is associated with a break-in with the intent of theft, whereas theft is the act of taking someone else’s property or belonging without consent or permission. It is essential to understand the distinction because home insurance plans cover losses caused by burglary and not theft.
7. Duty of Disclosure
Every policyholder must furnish true and correct information about the structure as well as its contents to the insurer. Insurance, being a relationship between the insured and the insurer, is based on trust. Any incorrect information may lead to rejection of the application as well as claims in future.
To summarise, these key terms will help in understanding home insurance with ease.Look into more general insurance plans to receive comprehensive coverage for other aspects of your live life as well.