Nasir Siddique, ACII (UK), CPCU (USA) MBA (Insurance & Risk Management), Assistant General Manager / Team Lead (Underwriting), IGI General Insurance Limited, Lahore

Home insurance is a type of insurance policy in which the home along with its contents and other possessions of the homeowner is insured against burglary or accidents that may occur in that particular home.

Basically, the term home insurance includes the insurance structure for two different criterias. The insurance for the home and then the insurance for the contents of the house, that cover the household objects and as well as the other valuables.

Homeowner's policy is referred to as a multiple-line insurance policy, meaning that it includes both property insurance and liability coverage, with an indivisible premium, meaning that a single premium is paid for all risks. The cost of homeowner's insurance often depends on what it would cost to replace the house and which additional endorsements or riders are attached to the policy. The insurance policy is a legal contract between the insurance company and the named insured(s). It is a contract of indemnity and will put the insured back to the state he/she was in prior to the loss. Typically, claims due to war (whose definition typically includes a nuclear explosion from any source) are excluded from coverage, amongst other standard exclusions. Insurance is adjusted to reflect replacement cost, usually upon application of an inflation factor or a cost index.

The home insurance policy is usually a term contract, i.e. a contract that is in effect for a fixed period of time. The payment the insured makes to the insurer is called the premium. The insured must pay the insurer the premium each term. Most insurers charge a lower premium if it appears less likely the home will be damaged or destroyed: for example, if the house is situated next to a fire station or is equipped with fire sprinklers and fire alarms; if the house exhibits wind mitigation measures, such as hurricane shutters; or if the house has a security system and has insurer-approved locks installed.

However, all insurance policies are not created alike, which makes it harder for homeowners to decide which insurance policy will be better and cheaper for them. Usually, the premium paid and the level of protection offered by the insurance policy differs from policy to policy along with the premium and price.

Homeowners should take special care and should do complete research before concluding and deciding on which insurance policy to be undertaken by them.

There are steps available that would make the premium that the homeowner will have to pay, much less than what he would have had to pay otherwise.

Insurance policies are usually undertaken by homeowners to make sure that they won’t ever run into financial losses and have to bear the brunt of it. Homeowners should try to seek a home policy that carries a low premium with it. The homeowners can come to take the benefit of it, only when they lower the risk associated with it.

Thus the homeowners should try to lower the risk associated with their home, to lower the risk for their insurance policy. Homeowners should make sure that they meet the security requirements of the insurance companies. They should fit locks and deadlocks at all the doors and windows, organize neighborhood watch patrols, and make sure that they fix theft alarms by recognized fitters. If the homeowners take these few steps to secure their home, then they can get the premium reduced to their liking and benefits.

However, before making the security arrangements and using the security equipment, the homeowners should enquire whether the insurance companies would comply with the steps that the homeowners have taken to secure their home.

Homeowners should also try to lookout for different home insurers for the home as well as for the contents of the home. Because, sometimes although the insurers charge low for the building insurance, they charge a high price for the contents of the home. Thus it would be beneficial for the homeowners to look and search for different insurance policies because their aim should be to avail the cheapest home insurance.

Furthermore, the homeowners should themselves lookout for cheap insurance policies instead of depending on the money lenders to provide them a scheme. They should themselves directly go and have a talk with the insurers or rather search on the web, which is very cost-effective and as well as pretty fast.

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