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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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So you have finally bought your own house. As you may have already figured out, buying that dream house was not only the biggest investment of your life but also a very emotional affair – one that is inextricably linked to your dreams and memories.
After putting so much thought into such an important buying decision, leaving the protection of your home to fate is not the wisest thing you could do. It is your responsibility to ensure that your house remains safe no matter what. Fire, theft and other risks are always lurking around the corner. You don't want such unfortunate incidents to leave you feeling financially helpless. Hence, it is always better to secure your property with adequate property insurance so that it can act as a shield during such crisis situations.
However, before you choose an insurance policy for your house you must consider whether the policy is suitable to your needs.
Here are four important things to keep in mind when buying your house insurance:
Choose the right plan
Property insurance is not just to compensate you for the money lost in case of an accident or untoward event, it can also be used to claim money required for repair or renovation of the residence after the accident. In other words, post-accident recoveries can also be included in the policy. For example, say the valuables in your house have been lost in a fire accident – in such a case you can claim the loss incurred as per the coverage you have taken and some additional money for expenses met for clearing the debris and repair too. Choosing the right plan after assessing all possible scenarios and going for specialized packages is one of the most important things to do while buying a property insurance cover. Understanding the elements covered by the insurance plan is also crucial. For example, if the property is located in a flood-prone area, flood insurance becomes crucial.
Get adequate coverage
Choosing a coverage amount based on an accurate valuation of your property and is very important. You may save a bit on premium if you choose to go for a lower coverage, but this may cost you a large sum later if your property and belongings are under-covered and your property is damaged in an accident. It is akin to being penny wise and pound-foolish.
Check your insurance company's claim settlement ratio
Don't just buy from an insurer that offers the cheapest rates. Since property insurance involves huge sums of money, you must be extra careful while selecting the insurance company. You should give weightage to companies that have a high claim-settlement ratio.
Read the fine print
Don't ignore the policy document assuming that it contains boilerplate inclusions and exclusions that your agent explained to you. Never miss out on the fine print and verify if all the terms and policies are those that you agreed to. If you find any errors in the policy document even if it is a spelling error in the address, bring it to the notice of the insurance company immediately and get an endorsement immediately.
You might feel that in reality, property insurance does not protect your property but rather just compensates you for any untoward incident. While that may be true, it is also a strong protection against unforeseen calamities. In addition, once you put the above points into practice, taking care of your property will be a little less stressful.
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