Wondering what is home insurance
? A home insurance policy is a smart way to ensure that your house, belongings, and savings are secured from otherwise unforeseeable events. Home insurance policies can compensate you for damages incurred by the structure of your home, ancillary & supporting structural elements to your home, the contents of your home, and your valuable items in a home you do not own but are renting.
Understanding the mechanics of your home insurance policy can calibrate your expectations. You will know what the premium you are paying is, the tenure of coverage, what is included in your insurance plan, and the exclusions of your insurance plan.
The tenure of your home insurance policy
and the renewal date is critical to avail home insurance benefits
for yourself. Here are some insights to help you understand the mechanics of a home insurance plan in detail.
Simple Vs. Long-Term Home Insurance Policies
Home insurance policies are available in two formats, depending on the tenure of the policy:
- Simple Policies: Such policies tend to cover the home for anywhere between one to three years or a little more. Since the tenure is shorter and the risk is established, you might find these policies to be relatively cost-effective compared to the long-term policies.
- Long-Term Policies: These are policies that are designed to provide long term cover to your estate. They can have tenures as high as 30 years. However, the policy's tenure also increases the possible quantum of damages it can incur over its lifetime. And as this becomes riskier for the insurer, it is common for such policies to be relatively more expensive.
Now, should you go for a long-term policy or a short-term policy? While the short-term policy’s premiums may seem more affordable for the time being. But, if you increase them every three to four years and have to buy the same policy multiple times over the lifecycle of a property, will it still be equally affordable? Answering this will help you understand what type of policy you should get.
Do I Have to Renew My Home Insurance Every Year?
To understand the answer to 'do I have to renew my home insurance every year,' just evaluate the tenure of your home insurance policy. If your policy covers your home and its contents for one year, you will have to renew the home insurance policy every year. If it is a long-term policy, you can renew it just before the tenure ends.
Benefits of Renewing Home Insurance Policy
- It keeps your savings intact against damages incurred by your home, contents, and the supporting infrastructure.
- It makes your home more attractive for a buyer. While the home insurance plan itself is not transferable, the buyer will have some assurance that the previous owner was responsible and never cut corners in servicing the home after an instance of considerable damage.
- Renewing your home insurance plan helps you stay updated with the value of your home and its contents. Since each renewal will require some form of revision of the valuation metrics, it will keep you informed about the home's expected price and its contents.
- You can keep your estate secure for your future generations. Home insurance policies renewed in time will ensure you can maintain the property and its contents for a long time, even if the estate incurs some form of damage. This way, your future generations can directly avail the benefits of home-ownership without getting into the real estate market.
What is Home Insurance Renewal Dependent Upon?
You can now renew your home insurance plan online. Generally, you would not need much more than your identity proofs, ownership proofs, salary data, tax returns, and previous insurance documents about the home being insured. Here are some elements the home insurance plan’s renewable depends on:
- Condition of the home you are trying to cover with the insurance plan.
- Depreciated and market value of all the contents you want to get covered.
- Geographic location of the home. It is common for home insurance to be more expensive in zones more prone to natural calamities.
- Financial background of the homeowner or home content owner seeking insurance.
- Criminal record of the homeowner or the home content owner seeking insurance.
- Available tenure on the existing home insurance plan.
- How early should I begin the renewal process for my home insurance?
It depends on the tenure of your home insurance plan. If it expires in a year, you should consider renewing it a few months or weeks before it expires. This will give you enough room to finish the documentation.
- How Can I Renew My Home Insurance Plan?
You can do so online or get in touch with your insurance agent.