The insurance
industry in India is set to achieve a market size of $280 billion by the year 2020. Irrespective of the considerable
market size, insurance premiums are still lagging behind in contribution
towards GDP (3.69%). Although insurance policies are garnering substantial
traction due to increased awareness amongst individuals, there is a lot of
ground to cover, especially in terms of home insurance policies.
In most cases, individuals do not feel the need for property
insurance, which sits in contrary to the number of crimes associated with home
burglaries and property damages in India. In some cases, individuals feel
reluctant to approach a policy because of unfamiliarity with the home insurance
terminologies.
Understanding the jargon is essential for multiple reasons –
knowing precisely what you are subscribing to in the policy, whether you are
being swindled by a fake insurance aggregator or not, and the extension of
coverage by your policy.
List of home
insurance terminologies
When you decide to look for home
insurance policy, you will come across the
following terminologies, some of which you might already be familiar with.
Irrespective of that, here’s a comprehensive list of terms you need to know –
●
ACV or
Actual Cash Value – It represents an approximation of the current fair market value of
a property, including all its
belongings. In other words, it is the replacement or
repair costs of the damaged property. It is calculated post deduction of
depreciation.
●
Actuary: A
professional analyst, who gauges the probability of claims by assessing factors
such as your claim history and
sets your premium accordingly.
●
Additional
living expense: In cases of property damage, some of the best home insurance
policies offer additional living expenses associated with rental or otherwise,
depending on policy stipulations.
●
Binder: It is a
temporary insurance policy issued by the respective insurance aggregator to
postulate that the policy is in action.
●
Catastrophe: An event
or incident, usually a natural calamity or disaster, which affects your
geographical area and has resulted in property damage.
●
Damage: It
attributes to any damage suffered by you or your family members on account of a
catastrophe. It also refers to damage caused to the property.
●
Damages: It is the
compensatory amount a party has to pay to another party on account of losses
suffered by the latter due to the former.
●
Deductible:
The amount you are required to pay before the insurance aggregator
reimburses your damages through a claim.
●
Building
coverage: A portion of your home protection plan, which allows you to
receive a claim to repair or rebuild your housing property.
●
Endorsement: Any
additional feature(s) you have included in your insurance policy.
●
Exclusion: The
instances or circumstances under which you will not be able to avail any
financial coverage.
●
Fire
resistive: The term refers to establishments or properties that are made of
concrete or steel or other non-inflammatory materials.
●
Hazard:
Circumstances or instances which heightens the possibility of the occurrence of
a loss.
●
Housekeeping: It
attributes to the general cleanliness, care, and maintenance you employ in your
housing premises. It is an instrumental factor when availing a claim.
●
Home
inventory: Refers to the inventory of your possessions and includes values
of each belonging separately.
●
Improvement
or betterment: Additions made to a property which increases its value.
●
Larceny: An event
which involves the theft of belongings or personal properties.
●
Limit of
liability: It is the maximum claim amount you have subscribed for when
purchasing your insurance policy.
●
Negligence: When you
do not apply appropriate care in any situation that might be relevant to a
perilous incidence to your housing property.
●
Perils: The risk
or causes of loss specified in your home insurance policy for which you will
receive financial coverage.
●
Renewal: The
extension of an insurance policy.
●
Umbrella
insurance: It refers to the additional coverage on top of the coverage
provided on your home property insurance.
●
Underwriter: The
individual who decides whether to accept or reject a claim.
These are a few terms you need to be aware of concerning home
insurance in India. Ensure that you read the policy terms and conditions
carefully before purchasing.
