Home Insurance: What is it, and How Does it Work?

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Most people will think that a house is an asset and a very big achievement in their life, this is certainly very reasonable, considering that a house is obtained with a very long process and hard work over a long period of time.

By looking at the facts above, it is only natural that you will always want all the best care and protection for your home. This will prevent you from experiencing a number of risks of loss that can come at any time to the house, because basically none of you can predict when disaster will come. For that, you need protection from the start, namely by using home insurance.

Home Insurance and Its Benefits

Although it is not as famous as life insurance and health insurance, home insurance is also well known and widely used by the people of Indonesia. This is due to the high public awareness of the various risks of loss and also natural disasters that can occur at any time.

Home insurance is insurance that provides protection against losses due to fire, theft, or damage caused by natural disasters.

By having home insurance, all forms of risk of loss arising from the various things mentioned above, will be borne by the insurance company. That way, you can calm down and feel comfortable because your assets have maximum protection that will prevent you from worrying and even being afraid of these things.

Imagine, what would happen if at any time a fire disaster struck your house and consumed the entire building and the assets in it at once? This incident would certainly be very scary, right? Given that the house is a valuable asset and has historical value for you and your family, you will be emotionally devastated by this incident. Then how about the repair?

If you do not have insurance, then all losses arising from the incident will be your own responsibility. It's easy if you have enough funds, but what if you don't have the funds for it? Then you can be sure that you and your family will suffer and experience financial difficulties, problems in handling jobs that bring a steady income every month, it is difficult to return to your initial position or condition.

Never underestimate the problem of home insurance, the protection is very large and has very important benefits for you and your family. Not only major damage, but various other minor repairs due to natural disasters will also be covered by it.

Types of Home Insurance

When you talk about protection, it is only natural that you will always want the best protection you can get. This of course you do with the aim of minimizing the risk of losses that may arise at any time in the future. Based on the services provided, home insurance can be divided into two types, namely:

1. Property All Risk / Industrial All Risk

This is a type of fire insurance that is unnamed perils, which provides coverage against all risks that occur to the property and or interests insured, except for the risks stated in the exception, namely: war, terrorism, nuclear and radioactive; delay, loss of market share or business interruption; intentional, dishonesty of employees: mechanical and boiler breakdowns; wear, corrosion, the nature of the goods themselves; pollution or contamination.

The guarantees provided by the Property All Risks (PAR) Insurance service include:

• Guarantees for riots, strikes, evil deeds and chaos.
• Coverage for hurricanes, storms, floods and water damage.
• Guarantee for earthquakes, volcanic eruptions and tsunamis.
• Coverage for landslides and ground movement.

Basically, Property All Risk (PAR) insurance only applies to non-industrial buildings, such as: offices, residences, hospitals, schools and various other property buildings. As for industrial buildings, such as factories, warehouses, malls and shops, Industrial All Risk (IAR) insurance will be used.

2. Standard Indonesian Fire Insurance Policy (PSAKI)

This insurance is a standard policy issued by the Indonesian General Insurance Association (AAUI) as a form of fire insurance service. The benefit of this property insurance product is that it provides protection for the insured property and or interests which are directly caused by: fire, lightning, explosion, airplane crash, and smoke.

However, in addition to the main benefits listed in the PSAKI, fire insurance can be extended by covering other risks that are not covered in the PSAKI, including:

• Riots, strikes, damage by evil deeds, riots.
• Floods, hurricanes, storms and water damage.
• Landslide.
• Demolition.
• Business interuption

How Home Insurance Works

Before deciding to buy a product, of course you always want to know about the pattern or how the  product works. Thus, you will not be disappointed or even feel aggrieved as a result of the purchase made. This will also apply in home insurance, you certainly want to know clearly the benefits and how the insurance company works in the product you are going to buy.

Example:  You have a house with a building area of ​​100 square meters, with a house insured value of IDR 400,000,000.

The insured value will be obtained by calculating the amount of funds that will be needed to build the 100 meter house at this time. If currently IDR 4 million is needed to build every one square meter, then for a house with an area of ​​100 square meters, IDR 400,000,000 will be needed.

However, in addition to the physical building of the house, you can also insure the assets contained in the house. For example, the value of the assets you have is IDR 100,000,000, then the total value of your coverage is IDR 500,000,000.

After getting the insured value, then you can multiply that value by the permile unit, so that you finally find the annual premium that you must pay, which is IDR 750,000. This amount is certainly very far when compared to the insurance value that you will get, right?

Tips for Choosing Home Insurance

Today there are many insurance companies that provide home insurance services, so you have many choices. However, given the importance of the protection that you will get from a home insurance service, it is only natural that you consider this very carefully. The following are tips in choosing home insurance that you can consider:

1. Choose the Best Insurance Company

The main thing that you must consider is choosing the best insurance company , you can do this by searching for adequate information from the internet or by going directly to the insurance company that is at your standard.

Find an insurance company that has a good credibility and reputation, this will be a guarantee of the service you will get from them. Use only insurance companies that are trusted and can meet your needs for qualified insurance services.

2. Use the Right Police

Make sure you know well, the contents of the entire insurance policy that you will buy and use. This will prevent you from the risk of loss and various problems that occur due to a misinterpretation of the policy from the start. If it turns out that you are having problems learning the contents of the policy, then it's a good idea to ask an expert or insurance broker. 

3. Choose Adequate Coverage

In buying an insurance policy, make sure the amount of premium you pay has met adequate coverage, so you can avoid the risk of getting a low coverage value. Carefully calculate and consider each component of the coverage that you will get, so that you can get the maximum benefit from purchasing the insurance you use.

Insure Your Home Now                                                           

As a high-value asset, it is only natural that your home is equipped with insurance protection. Don't be afraid to pay a premium in the home insurance you buy, it will be directly proportional to the protection benefits you will get.

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