5 Things Your Homeowners Insurance Might Not Cover

Posted on: Jul 20, 2021 | | Written by:

5 Things Your Homeowners Insurance Might Not Cover

Published on July 20, 2021. EST READ TIME: 3 minutes

5 Things Your Homeowners Insurance Might Not Cover

A home is more than just a house. It is the one place on earth that we can truly call our own. For most of us, it is our most prized possession. This is why it makes sense to secure our valuable homes with a good home insurance policy. After all, life is unpredictable, and while we may not be able to prevent untoward incidents, we can stay prepared to meet the financial costs of accidental damage to our property. A good homeowners insurance policy can help you meet the cost of repair and replacement to your property on account of accidents, natural calamities, theft/robberies, etc. However, when buying homeowners insurance, it is important to read the fine print and be very clear about what your policy covers and what it does not. Many homeowners get lulled into a false sense of security in the mistaken belief that their home insurance policy secures them against all kinds of damages imaginable.

What is a Homeowners Insurance?

A homeowners insurance is a policy that entitles the insured person or entity to a predefined assured sum in case of damage to or theft at their home premises in return for a fixed premium. The exact conditions or eventualities that activate the insurance claim may vary with the policy and are listed in detail in the policy document.

Homeowners Insurance vs Home Warranty

A homeowners insurance is typically limited to covering the structure of a property whereas a home warranty is a form of protection that covers damages or repairs to the systems such as plumbing, electric wiring, ventilation, etc. Often homeowners use a home warranty along with a home insurance to make sure they have comprehensive coverage for their homes that secures them against all kinds of eventualities.

Things that May Not be Covered by Homeowners Insurance

1. Valuables, Collectible Items, and Antiques

Like all insurance policies, home insurance policies come with a cap on the amount of insurance they can provide, called a sum assured. This sum may vary to a certain extent with the amount of premium paid, but only within a range specified by the insurer. The value of the maximum sum assured is arrived at keeping in mind the current cost of repair and replacement to the average home. If however you have decorated your home with valuables such as art, sculpture, or antiques, or have valuable jewellery at home, the sum assured provided by your insurance policy might not be enough to cover their monetary cost for the simple reason that such items tend to be very expensive.

2. Home-Based Business Set-ups

If you run a business from the premises of your home, and have invested money in purchasing assets such as computer systems, furniture, machinery, tools, etc. for setting up the business, your homeowners insurance may not cover any damage to these assets. This is because most home insurance policies very clearly mention that they are meant to cover damage only to residential premises. By its very definition, a home insurance policy, then, can not be extended to a business housed within a home.

3. Theft of Identity or Personal Data

Valuables at our homes aren’t just limited to expensive jewellery. Our homes are also the archives of all the paperwork that define our identities and our lives - the certificates, the documents, the IDs - that constitute the definitive record of our lives and our achievements. Additionally, we may also store sensitive documents related to work or business at our homes. The theft of such items due to a burglary can be an invaluable loss. Most regular home insurance policies, however, do not cover these.

4. Cash

This is one of the most common scenarios in India, and yet, one to which most homeowners continue to remain oblivious. Home insurance policies provided very limited coverage for cash lost due to damage or stolen in a burglary. In India, it is not uncommon for people to keep considerable amounts of cash for everyday use. In the event of a wedding, a family function, or a religious ceremony, it becomes a matter of necessity to withdraw and keep a few lakh rupees in cash handy to take care of everyday expenses, gifts to relatives, and charitable donations that are all part of our custom and culture.

5. Limited Repair Coverage

Although home insurance policies typically cover the costs of repair, they often come with a lot of strings attached that limit the range of choices available to a homeowner. For instance, certain policies may require you to choose from only a certain set of pre-listed or empanelled contractors for repair. Make sure that you read the fine print in your home insurance policy when it comes to repair.

How to Find the Best Home Insurance Plan

From the preceding discussion, it is clear that while home insurance policies are meant to secure your homes, there is a lot that they leave out. Some items, such as jewellery, valuables, and collectibles, can sometimes exceed the value of the property itself. In such a case, it is imperative that you have a home insurance policy that provides add-on coverage for all the assets located within your residential premises. HDFC ERGO’s comprehensive home insurance policy cover comes with a number of add-ons that protect your home from every eventuality imaginable - from covering your valuables to providing insurance cover in the event of a terrorist attack.

Conclusion

A homeowners insurance provides much-needed security when it comes to our most prized asset - our home. However, this coverage should not be limited to the structure of the home only. A home, after all, is much more than the bricks and cement that went into its making. Our homes contain our prized possessions such as family heirlooms and jewellery passed down the generations, or our personal documents that are the very record of our existence. Make sure that your homeowners insuranceprovides adequate cover for such invaluable belongings.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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