How is Home Insurance Calculated?

Your home is your temple. It’s important to not only ensure its wellbeing and security but also its financial aspect. It is a prudent choice to insure your home against uncertainties like fire, theft, damages, loss, natural calamities, etc. Home insurance will provide protection against these uncertainties and ensure continuity of your lifestyle. But before you buy a home insurance policy, wouldn’t it be wise to know how is your home insurance calculated? We’ll help you understand the premium calculation process as well as the coverage calculation process, so you have complete clarity and command over it. Let us dive in!

How is the coverage of a home insurance policy calculated?

The coverage provided under a home insurance policy is calculated based on the following points:

Type of home insurance policy: The coverage will primarily depend of the type of home insurance plan you opt for. Whether you are insuring the entire building or insuring just your flat. Further, the coverage will depend on whether you are insuring just your flat or the contents within the flat as well. The type of policy you choose will impact the coverage.

Content valuation: The value of the contents of your home will also play a part in determining the home insurance coverage. The more expensive the contents of your home, the more coverage the company will provide you. Expensive jewelry and furniture will increase the coverage further.

Building valuation: Coverage will also depend on the reconstruction cost of the building in case a major event occurs.

How is home insurance premium cost calculated?

Area of home: The larger the area of your home, the larger will be its repairing cost. This will impact the premium of your home insurance policy.

Value of internal contents: If you have expensive internals like antique furniture, designer marbles, high-tech gadgets, etc, the cost of insuring them will merit a higher premium.

Approximate repair costs: Potential repair costs play a key role in determining the premium amount.

Location of the home: If your home is located in a plush neighborhood, the cost of insurance will be higher.

Riders: The premium will increase if you choose additional riders within your home insurance policy.

Benefits of a home insurance

A home insurance policy will provide the following benefits:

Protection: Home insurance will protect you against man-made and natural uncertainties. It will provide coverage against theft, fire, floods, acts of terror, etc.
Continuity of lifestyle: Your lifestyle will have continuity after an uncertain event, as you will receive the claim amount. You may use this amount to continue your existing lifestyle.
Temporary living expenses: The insurance company will provide you with temporary living expenses in the event that your home is uninhabitable. You may use this amount to arrange for temporary shelter.
Peace of mind: You can sleep peacefully knowing that your home and its contents are insured.