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8 Myths about Home Insurance Demystified

Have You Ever Wondered Which is Worse?

A devastating earthquake or picking up the pieces of life after surviving such an earthquake?

Perhaps the second one requires more resilience and determination. It also requires the hand of providence and of-course good planning habits.

It would be a shattering to see one’s home crumbling in front of their eyes and would be all the more depressing if the house is not insured.

Table of Contents

First, let’s see what is Home Insurance.

What’s Home Insurance?

This offers protection to the structure of the house in the event of any physical damage or destruction by any unavoidable perils. It covers loss or damage caused by man-made and natural calamities.

Now there are certain myths with regards to home insurance and through this article, we attempt to de-construct such myths:

Myth # 1: Home Insurance does not cover hand-of-God incidents


It is a general feeling that home insurance does not cover natural disasters. However, mishaps like fire, earthquake, flood and other perils are amply covered in the first section of most home insurance policies. In most of the plans, this is mandatory coverage.

In order to understand what is covered under the policy, it is important to read the policy documents carefully. Only after considering the terms of the policy in detail should one commit to purchase the policy.

It is a fact that some insurance companies may cover a particular form of a natural disaster while others might not do it. It is always a good practice to compare different policies before buying one.

Myth # 2: Settlement of claims is a cumbersome process

Many people shy away from buying a home policy simply because they feel that the claim lodging and settlement process is innately cumbersome. Actually, it is not that intimidating and just needs to follow a particular procedure.

When the property of the insured is damaged due to some calamity, intimation has to be given to the particular insuring company as early as possible, either to the local office or the main office as per the stipulations in the policy.

The insurer on its part will send an agent to survey the extent of damage to the policyholder’s property. Once the agent files the report, the decision is taken regarding the value of the claim that is permissible as per the policy.

The insurer might ask for certain documents from the insured before they finally go about the process of settling the claim.

With the gradual and progressive improvement in technology, a lot of ease has come about in the process of storage of policy documents. Now policy documents can be stored in Dematerialized or electronic format also. This helps in the case where the original policy has been misplaced or lost and in such situations, the only question that the insurer asks is the date when the policy was taken.

Myth # 3: Low Insurance Premium means Low Insurance Coverage

Home insurance

Insurance coverage for homes and the premium amount payable are not always directly proportional. If the home to be insured is already equipped with such safety devices as fire alarm, and burglar alarms, it is likely that the insurer will offer discounts on the premium.

Judicious decisions while buying a policy will help in keeping the premium cost low. For example in areas, which are calm and peaceful a cover for riot and terrorism might not be required at all.

As these natural calamities are not very frequent, the risk for the insurer is low. So the premium will be obviously low.

Myth # 4: It is necessary to own the home for having it insured

Often people are under the impression that in order to insure their place of residence, they need to own it. This is not true.

The house owner can insure the basic structure of the house that he is renting out.

A tenant can always insure the belongings in the house they are residing in. If they happen to change homes, the insurer can approve the change of address.

Myth # 5: Burglary is not covered

Home insurance policies cover not only damage caused by natural disasters but also damage or loss caused by robbers burgling the house or even attempting to burgle it.

Individual items of value like pieces of jewellery, documents, gadgets and fittings can all be insured. However, discretion may be used to insure only the valuables, else the premium will be substantially high.

Myth # 6: Home insurance only covers the structure and contents

Home insurance only covers the structure of a home. Insuring the structure of your home is more important. If you want to cover the contents of your house, your premium will increase accordingly and the insurance becomes costlier.

If you need you can also choose add-on covers. For eg: You can choose the loss of rent add-on cover and you would be indemnified in case your tenants vacate due to any damage caused to your house.
Some of the other add-on covers are:

  • Loss of rent,
  • Temporary resettlement cover,
  • Public liability,
  • Pet dog insurance cover,
  • ATM withdrawal cover,
  • Lost wallet cover,
  • Key and lock replacement cover

These covers provide wider protection to your home.

Myth # 7: Buy lower coverage to reduce the insurance premium

Don’t do this as it breaks the very purpose of buying insurance. A low coverage may not cover your entire risks hence buy sufficient insurance to cover all your risks.

Myth # 8: It does not cover damages due to normal wear and tears like leakages

If your home is damaged due to leakage from overflowing water tanks, pipes or automatic sprinkler, it is covered by home insurance. The list includes:

  • Water leaks causing damage to the property
  • A water leak in the roof
  • Bursting of pipes
  • Bursting of water tanks
  • Accidental leakage from automatic sprinkler installations


While buying an insurance policy it is imperative that the policy document is studied thoroughly. Clarifications may be sought in case it is felt that there is any ambiguity in the policy clause. With online policy buying becoming simple, it is an easy to compare the various policies online before taking a final call.

Does your myth about home insurance clarify? If you have any queries you can let us know through the comment box


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