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Why Big Societies Are Getting Building Insurance?

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Published on May 18, 2021. EST READ TIME: 3 minutes

Housing is a sub-sector of the real estate industry, with a market value of Rs. 65,000 crores expected by 2040. Like most other sectors, the housing sector is susceptible to severe losses in the event of natural calamities, fires, burglaries, and the like. To help people overcome losses during such crises, insurance companies offer building insurance.

While property owners can purchase this type of insurance themselves, builders of big societies have started to purchase it and pay the premium to protect their buildings. Here is all there is to know about building insurance to understand why owners of big societies buy it to ensure safety.

What building insurance covers?

Although building insurance is not a legal mandate, having it is beneficial as it is comprehensive and protects you against several types of damages or losses. Below is what building insurance covers:

1. Natural calamities

Natural calamities can lead to heavy damage. Since it is difficult to ascertain the exact date and intensity of a potential natural disaster, it is always better to stay prepared. In recent times, India has witnessed severe cyclones, floods, and storms, making protection against natural calamities all the more crucial. Building insurance covers damage due to hurricanes, earthquakes, floods, storms, and so on.

2. Burglary and theft

We keep precious items like jewellery at home because we believe it is the safest place for them. Despite heavy security, burglaries are common even in gated communities. If any of your valuable items are stolen, building insurance can pay for it, provided you have the necessary add-on cover.

3. Fire

A fire outbreak can be fatal. Moreover, it has the potential to damage or destroy your home. Purchasing building insurance can protect the building structure and its contents against fires.

4. Man-made hazards

Not only natural calamities can cause damage to your building. Man-made hazards, such as riots, strikes, and malicious acts can also lead to damage or destruction. Building insurance protects the property against such losses.

5. Alternate accommodation

In extreme cases, any of the above-mentioned losses cancause structural damage and render your house inhabitable. If this happens, a building insurance policy will cover your shifting expenses, emergency purchases, rent for hotel/alternative accommodation, and brokerage.

6. Accidental damage

Owners of flats in societies frequently commission interior work to customise their homes. They spend a fortune on these modifications, which may include fixtures, sanitary fittings, and other items. In such cases, building insurance can come in handy because it secures these expensive items against accidental damage.

What building insurance does not cover?

As is the case with every type of insurance policy, building insurance also has some exclusions, including:

1. Damages due to war

While building insurance policies cover damage caused by various factors, war, acts of foreign enemies, invasions, are not covered.

2. Wear and tear

The policy will not cover damages resulting from normal wear and tear, maintenance, or renovation.

3. Old items

Although you may own old precious items, remember that building insurance does not cover possessions older than ten years old.

4. Wilful misconduct

The insurer will cover you against unforeseen losses but not damages conducted wilfully.

Optional covers with building insurance

Aside from these, you can extend protection to your electronics, jewellery, and so on. Here are some types of add-on covers available with building insurance:

1. Portable electronic equipment cover

Building insurance protects your portable electronic items, such as cameras, laptops, musical instruments, and so on, even if you are away from home, provided the damage is not intentional.

2. Jewellery and valuables cover

An add-on cover for valuables (diamonds, watches, sculptures, and articles and ornaments made of gold, silver, or other precious metals) and jewellery can protect them if they are stolen.

3. Terrorism cover

If the building is damaged due to a terrorist attack, building insurance will pay for damage.

Conclusion

Given how accidents can occur at any time, it is safe to say that building insurance is critical. While builders of big societies purchase this type of insurance, you should check to see if your builder has done the same. If your home is not yet insured, consider purchasing a building insurance policy to safeguard both your home and finances.

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

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