When is the Right Time to Buy a Home Insurance Policy?

Posted on: Oct 12, 2021 | | Written by:

When is the Right Time to Buy a Home Insurance Policy?

Published on October 08, 2021. EST READ TIME: 3 minutes

When to Buy Home Insurance Policy - Home insurance

In the process of buying a new home, at some point in time, the seller of the house will no longer be responsible for the damage to the property. This accountability of the damages will be transferred to you. But at what point will this happen? At the signing of the contract or at the time of settlement? This is very important to find out so that you have clarity when exactly you need to buy the home insurance?

Let us consider a scenario where the house is hit by an earthquake or a storm during the settlement period. In such a situation if there is no valid insurance for the house then you have to bear all the cost of damage. This sounds like a very dreadful situation right? Read this article to know about - At what point does the damage to the house come under your responsibility? And when is the right time to take Home Insurance?

What is meant by home settlement?

In the process of buying a house, after deal finalization, you need to sign the documents with the seller and enter a settlement period. Home settlement is the last phase of the home buying process, during which the buyer pays the agreed amount to the party which is selling the house. This is the point where the house ownership is transferred from the seller to the buyer.

The settlement period varies from location to location based on the local regulations. This period helps both the parties in doing the required arrangements which can be:-

(a) Getting the home loan approved

(b) Finalizing all the paperwork

When should one buy home insurance policy?

Lawyers always recommend buying home insurance just after signing the documents for the purchase of the home. There are chances that the seller might have insurance against the property till the settlement period, but it's always good to be protective from your end and get the home insured. There are chances that due to some technical issues, or since the property was shared among multiple owners the seller might have missed extending the insurance for the settlement period. If during this period any calamity happens then you have to bear the cost of damage since the deal has been finalized and you are going to be the owner of the house.

If your house is present in a multistorey building, then there are chances that your building is already insured. In such a case you just need to go for an insurance plan for your apartment which is done considering the built-up area and the cost of reconstruction. If your house is in the construction phase then the builder must have taken a project insurance policy, you just need to take insurance for your apartment when it's handed over to you.

It's not legally binding to buy home insurance, but everyone buys a home for mental peace. Therefore, if you buy home insurance online or offline it will give you a sense of mental peace and security.

Why do I need pre-settlement home insurance?

It’s a general observation that since the property market is a busy and highly profitable business, the sellers try to save money by not renewing the insurance policies during the settlement period. Sometimes in the haste to close the deal the property dealers disregard the insurance policy dates leading to its lapse. Therefore the house under the settlement period remains without any valid insurance policy and in case of any damage by fire, vandalism, or natural calamity the new buyer has to pay for the damages.

If you are planning to buy your new home through a home loan facility then generally the lenders make it mandatory to opt for home insurance at the time of approving the loan. Considering all these points it's highly recommended to buy home insurance during the pre-settlement period.

Conclusion

Buying an insurance policy for your home should be considered an intelligent move in protecting your house as an investment. Home insurance helps in covering the cost of repairs or major replacements caused due to unexpected Natural or Man-made disasters. In this digital age, people now prefer to buy home insurance online. HDFC ERGO is the leader in the field of insurance and takes care of all your insurance-based needs.

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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