Finance

Here’s How You Calculate Home Insurance Premium

One of the invaluable investments that an individual makes in their lifetime is buying a house. When it comes to picking your most prized asset, it is always your home for the necessary facilities that it provides, i.e. shelter for you and your family. There is great pride in owning a home. The first thing that one does when buying a house is redecorating according to their taste and liking. Say, a swanky L-shaped sofa with mahogany wooden furniture complemented by a wall-sized TV unit, just the way you always have imagined.

Now that you have bought your perfect house, are you missing on something? A home insurance plan!

Home insurance is one of the most reliable ways to ensure your house remains protected against any natural as well as human-induced perils. Storms, earthquakes, fires, burglaries are some examples to name a few. These perils are unpredictable and unfortunate and can have a huge financial setback. It can be insured using a householder policy.

The premium charged to secure your house is minimal when compared to the coverage it offers. It ensures coverage for your house by securing you for a nominal premium.

Now that you know the benefits of a home insurance policy, you may ask –

How is my home insurance premium calculated?

There is a misconception that homeowners can only purchase a home insurance policy. Let us tell you that it isn’t the truth. Home insurance plans are available for those who do not own accommodation of their own.

Here’s how the premiums are determined for your home insurance policy –

1.     Valuation of your assets

  • The total built-up area of your house is calculated.
  • The cost to construct per square foot is determined.
  • The contents of the house to be insured are determined like furnishings, appliances, jewellery, etc.

2.     Using a Home insurance premium calculator

A home insurance premium calculator is one of the nifty tools that come handy when you are determining the premium.

  • Select your preferred insurance company. Head over to its website and look for a home insurance premium calculator.
  • Next, select the ownership type of your house – rented or owned.
  • Enter the valuations as determined in Step 1.

This will give out the premium rates for your insurance policy. You can then decide on what additional items to include in the policy coverage depending upon the premium charged.

What are the types of policies that I can select when buying a home cover?

While there are myriad home insurance plans available to choose from, there are two prominent types of insurance policies that you can opt for – Structure insurance and Content Insurance.

➔     Home Structure Insurance

Any damage to the structure of your home is covered under this type of policy. The insurance company offers reimbursement in case of any mishap or damage due to natural calamity. A homeowner is advised to avail a bare minimum of home structure insurance.

➔     Home Content Insurance

Not only your home, but all your belongings also need an insurance cover. A content insurance policy ensures that in case of damage to the contents like appliances, furnishings or even jewellery is included under your insurance cover. The cost of these contents must be declared when availing the insurance policy. At the time of claim, its value is determined after reducing depreciation from its cost.

To conclude, a home insurance plan is an absolute no-brainer insurance cover that will safeguard your house, as well as its belongings. Make sure to invest in a suitable householder policy &ensure timely insurance renewal to stay at peace at all times. Stay safe, stay insured!

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