• Owning a house in one’s name is regarded as one of life’s greatest accomplishments. Therefore, ensuring its safety is crucial. For many Indians, the idea of home insurance is still a relatively new concept. Most are unaware that, similar to car insurance, it is also possible to purchase insurance for their home. It provides protection for your home in the event of theft, vandalism, natural disasters, or fire. Although a home loan is not mandatory, if you decide to take out a loan for your house, you must have a specific amount of hazard insurance in addition to home insurance.

• For many Indians, the notion of home insurance remains quite unfamiliar, leading to a literal interpretation of terms such as house insurance and hazard insurance. This may result in misunderstandings regarding their definitions and coverage. However, when you invest your hard-earned resources in constructing or acquiring a home, it is wise to make informed choices about insurance as well. Here is a guide that will help you gain a better understanding of the two concepts.

• Hazard insurance is included as part of home insurance and is not available as a separate policy. Let’s delve into the subject and clarify the distinction between the two.

What is Hazard Insurance?

• As indicated by its name, hazard insurance protects you against various dangers and risks that can cause significant damage. Hazard insurance only covers the damage inflicted on the structure of your house, which implies that the policy does not include the contents of the house or injuries sustained by you or your guests while inside the home. Hazard insurance is merely one small but essential component of a homeowners policy.

• The reason you might recognize the term ‘hazard insurance’ is due to lenders. Your mortgage loan provider may require basic hazard insurance before advancing with the loan since only hazard insurance is directly linked to the structural integrity of your home.

What is Covered Under Hazard Insurance?

● Man-made disasters such as vandalism, theft,
● Natural disasters such as earthquakes, cyclones, lightning, etc.
● Other disasters such as fire, short circuits, burst pipes, vehicles colliding with your home, explosions

What is Home Insurance?

• Home insurance is a policy that offers comprehensive coverage, encompassing hazard insurance too. It safeguards your owned or rented house along with the belongings inside it. Therefore, if you wish to extend protection to your possessions and cover injuries incurred from accidents, you can choose home insurance. Various types of residences such as apartments, independent villas, and standalone buildings can be insured under home insurance.

What is Covered Under Home Insurance?

● Damage to the structure of the insured home.
● Damage to garments, furniture, and art pieces within the insured home.
● Covers medical expenses for any person injured inside the insured building at that moment.

Hazard Insurance Vs Home Insurance

• Hazard insurance is a component of homeowners insurance. If you want to safeguard your household belongings and have medical costs covered in case of injuries that occur within the home, choosing comprehensive home insurance is advisable. Hazard insurance solely protects the structure of your building.

• If your property has recently suffered from a natural disaster such as an earthquake or storm, the premiums will naturally increase for your residence. Additionally, the rising inflation rate can influence the premiums you are currently paying. This is determined following an inspection of your home.

The primary discrepancies between the two insurance policies are established based on the coverage.

• Here’s how they function-
• Reason
• Hazard Insurance
• Home Insurance
• Fire or Smoke
• Coverage is provided, some disasters may be exceptions
• Coverage is provided at no or extra premium
• Damage to clothing, furniture, appliances, and books
• No coverage is provided.
• Contents like clothing, furniture, appliances, and books are covered under the insurance.
• Damage Caused by Vehicles
• Coverage is included under hazard insurance
• It is covered under accidents occurring on the premises
• Robbery/ Sabotage
• Coverage is available
• Covered on the first-loss basis by the majority of companies
• Explosion
• It is included
• It is determined after an evaluation of the cause
• Damage caused by a water heater, air conditioner, or in-home sprinkler system
• Coverage is provided
• It is covered if specifically requested as add-ons
• Electricity short circuit/ failure
• Electrical failures are included
• Covered if you pay an additional premium
• Riots
• Damage related to civil disturbances or riots is covered
• No coverage is provided for this

Conclusion

• The coverage provided under the insurance policies varies from policy to policy. Therefore, read the terms carefully and reach out to your insurance company before selecting any plan. Simply understand your needs first. If you possess valuables inside your home, you will certainly want to invest in comprehensive home insurance that also encompasses hazard insurance. Having insurance lessens the risk of your home losing value due to any damage or natural disaster. You will need to compare and shop around the two types of insurance policies to understand what is covered and what is not, as each company offers slightly different features and benefits.

Disclaimer:

• The above information is for illustrative purposes only. For further details, please refer to policy wordings and prospectus before finalizing any sales.