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Tips to choose the best Home Insurance policy and how to calculate the Home Insurance cost

Buying a home - whether you build one or buy one is a wonderful milestone to achieve in life. It is known to cause much stress - not only financially but also in terms of responsibilities of owning property and caring for it. Despite the challenges and stress points, for most of us, owning a home is akin to acquiring an invaluable asset to be cherished all your life.

As with any major investment, for a home too, insurance is an automatic addition that will protect the asset from risk of associated losses or potential setbacks. Home insurance is a boon for those wanting the security of protection for their asset. But with the number of Home Insurance policy providers and custom-made policies available, it is not too easy to make the right choice.

With the numerous choices available, most people have difficulty in choosing the right policy that is best suited for their homes. Although most of the home insurance policies provide an exhaustive cover, it is always best to customize it to suit your requirement. This will ensure that what you pay for fulfils your purpose of buying home insurance perfectly.

Here are some of the top tips to help you decide on the right home insurance policy best suited for your home requirements.

Understanding the Policy:

Most people buying home insurance or looking to avail one, don’t have a proper understanding of home insurance. Most people take their insurer’s word for it and do not even take time to read through the policy, coverage, and most importantly, the terms and conditions of the insurance policy. Only when you understand the specifics of the policy, will youl be able to identify your requirements and negotiate better with your insurance provider for better terms and a better policy.

Identify your Requirements:

Just like making a list of things to buy before you leave for shopping, it is ideal to take time to identify your requirements before you start looking for home insurance. Identifying your requirements will give you an upper hand and put you in a position where you can make sense of the various policies available and make a better deal. It is advisable to read thoroughly about home insurance either online or talk to an agent from one or more insurance providers to fully understand the policies and how to choose one that is best for you. Due diligence is the key to buying the right home insurance.

Go Window Shopping:

Once you make sense of the various policies available and have a thorough understanding of your requirements, start looking for reputable insurance providers and read up their policies that have been made available online by most insurance providers. After that, make a list of all the policies that you feel match your requirements, compare the policies online or with an agent in terms of coverage, limitations, deductibles, exclusions, price, and the premium.  set up appointments with various insurance policies and shop around to find the best cover. 

Research the Insurer:

Before you make your mind about your choice of insurer, take time to do complete research on the insurer provider. If your insurance provider takes a financial hit due to many circumstances, your policy and claims will suffer. So, it is better to do complete research on the financial background of your insurer before you apply for home insurance. This will give you confidence that you’re choosing a safe service provider. Further, it is also advisable to read up on their claim history and see that the claims have been met by the insurer as promised. Take time to check the claim settlement ratio which will give you a clear idea of the number of claims received and the claims settled.

Customize your policy:

Apart from the various policies available, insurance providers also provide you with a wide range of add-ons that you can add to your policy. If you have a feeling that your insurance coverage does not cover all your contents, you can include riders – i.e., add-ons. The add-ons could increase your coverage at an additional cost. It could be your jewellery, other important assets in your home, etc. This will enable you to insure all your invaluable assets under one cover.

How to calculate Home Insurance Costs?

When you apply for home insurance, calculating your home insurance premium is as important as choosing the right policy and insurer. This will give you a clear idea of the amount of money that you will be shelling out for the home insurance and for the premiums on a monthly basis for the premiums. Also, calculating your home insurance cost will save you from being over-insured or under-insured. Though this might seem expensive, it will protect your home and its belongings against any perils.

The right home insurance coverage must be set at an amount that is sufficient for you to rebuild your home from the scratch in case of a mishap. It is best that you think through this carefully and not apply any blind number that is not going to help you, should the need arise.

The following are the factors that determine home insurance cost:

  • The type of plan you choose makes all the difference. Based on the extent of coverage, the price might vary. If you choose to insure just your house, the value of the structure of the house will be taken into account. If you choose to insure the contents of the house, then the value of jewellery and other personal belongings will be taken into consideration. And, for a plan that includes the house and its belongings, both will be added.
  • The value of the building refers to the reconstruction cost and not the market value of the house. And for the building value, you can multiply the built-area of your home and the construction rate per square feet.
  • While calculating the cost of home insurance coverage, the value of Contents and jewellery must be calculated to make sure the coverage is sufficient enough to replace these contents.
  • As for the premium is concerned, the following are the factors taken into consideration – a type of ownership (owned or rented); the value of the building, cost of contents and jewellery and add-ons opted.

On the whole, choosing the right home insurance policy is all about ensuring that the policy you choose is providing adequate coverage to rebuild your life and save you from any financial expenses in case of a mishap.

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