02 September 2011
Why Do You Need an Home Insurance?
The fact about insurance is that whether you need it or not you have to take it. The times have changed and our homes are becoming much dearer in terms of value. When a single flat can go in crores then it is valid to get the place insured.
Riots, floods, fires, burglary and every event under the sun can give heavy losses to the home owners and to be on safe side the lenders also have made it mandatory for the borrowers of home loans to get the home insured. The premium to be paid and coverage depends upon different insurance companies as also the rules for eligibility criteria for recovering the amount in case of need. Even big and reputed companies in the home loan sector do not approve of a home loan without the borrower signing the insurance policy, either only for property purchased or sometimes even life insurance policy.
For the lenders they require to be on safe side as in any natural or created calamity they have a lot of money on stake. The borrower who loses property will not pay the lost amount and thus the home loan lending company may suffer severe losses of funds.
To be on the safe side all lenders and banks who offer home loans have made it a compulsory document along with other requirements for approval of the home loan. For the consumer I do not know how this benefits. Some facts show that only the construction cost of the property or home is covered, then what about the area rate, the premium charged by builders for latest amenities and the administrative costs paid by the borrowers for purchasing a home.
The borrower only comes to know about the fine details regarding insurance covers and policies when they get the original documents of the insurance policy and this takes place only after the home loan is approved and possession taken. So the borrower has no option but to go along with the lending company or bank and follow their procedures. No questions asked!~
Even if you wish to get more information or enquire about insurance policies you will not be considered. Since many lenders have tie up with insurance companies here also you will not have any choice but to go along with them. It would be better to get some information regarding insurance companies and policies and the actual premium amount you will require to pay every month, since this amount will be added to you EMI of home loan.
When an actual calamity strikes your family and friends only will help you. I have heard insurance companies make you run from pillar to post to recover your dues. Experienced with vehicle insurance and did not pursue the matter due to unnecessary hassles involved. So whether you need it or not you have to take it!