Are you planning to buy a new home in the upcoming new year, 2025? Or are you already a homeowner, or have you bought a new house recently? This blog will be very useful for you because we will explore the benefits of home insurance. Your home can suffer damage from normal wear and tear to extreme weather damage to windows, siding, roofing, and other exterior features.
Your daily activities can also damage the interior of your home, which requires maintenance over time. Home insurance in Pakistan is crucial for your personal financial security since you will eventually be paying for your house repairs.
Understanding Property Insurance
Property insurance covers various events like vandalism, theft, flood damage, maintenance damage, earthquake damage, and sewer backup. The insurance also covers the damage to a property caused by any theft or other crimes. A lack of property insurance will make the renters or the property owners cover all the expenses caused by anything. Moreover, insurance companies are mistrusted in Pakistan, and as the market is evolving, many insurance companies are entering the real estate industry.
If you want to trust insurance companies and have one for your property, then you must know the financial protection it provides.
What a Home Insurance Covers?
Replacement Cost
Insurance companies cover the replacement cost for any property that has been damaged. The calculation of the cost is based on other properties of comparable materials and the quality used. The replacement cost is applied only if the insurance policy allows spending to replace or repair the damaged property.
Extended Replacement Costs
This extended replacement cost extends the property insurance coverage limit to cover the extra costs associated with the property rebuilding outside of control and exceeds the insurance policy coverage limit.
Cash Value
Insurance companies also use the cash value of the property to estimate and meet the costs of the damage done to the property. The property cost is covered with the new property cost of similar quality and kind.
Tip: You must compare different insurance policies to know which one is best for you according to your budget.
Property Insurance in Pakistan
The insurance industry is misunderstood and also misrepresented by the customers. According to Statista, the property insurance market in Pakistan has reached a market size of US$1.51bn in 2024. The average spending per capita in the property insurance market was expected to amount to US$6.17 in 2024.
Also, the annual growth rate of 2.64% will result in a market volume of US$1.72 billion by 2029. Still, the United States has the highest gross written premium of US$240.4bn in 2024. However, despite the growing property insurance market in Pakistan, many challenges remain in ensuring widespread affordability and coverage for the population.
Despite a growing property insurance market in Pakistan, challenges remain in ensuring widespread coverage and affordability for the majority of the population. One of the reasons for this can be the weak economy and income rate of the population. People cannot afford to pay for the insurance, and that is why they don’t avail themselves of this option.
Here are the top 5 reasons you should go for the insurance right away!
Top 5 Reasons for Home Insurance
1. Coverage in Natural Calamities Damage
Homes can be damaged because of climate change that cannot be predicted easily, such as excessive water, strong winds, or maybe earthquakes. Home insurance will cover all the damage, despite all these damages. Having home insurance, you can ensure that you won’t have to face any financial difficulties in the future. Luckily, some insurance companies design their policies according to a certain region’s environmental disasters.
2. Mortgage Protection
Some accidents, like a fire or explosion of gas, can occur without any warning. This can cause huge damage to your house, or even destruction can happen. Home insurance is meant to cover these losses and prevent homeowners from spending this high amount for such nuisances.
In the absence of home insurance, homeowners would have to spend a lot of fortune to cover such damages or even get into debt.
3. Compliance with Mortgage Terms and Conditions
Many lenders go for home building insurance if they have a mortgage, as part of the mortgage contract. This home insurance protects the loan providers or mortgagee’s interests. In any catastrophe, the injured will be given facilities for reconstruction or repairs. Therefore, it protects the lender’s collateral as a dwelling unit.
4. Additional Benefits When Selling Homes in the Future
Home building insurance can give you more benefits, especially when you sell the property. This is because, if the home has a good history and has been damaged, the buyer knows that all the repairs have been done professionally. Also, if you maintained the use of the insurance after the home had been damaged, such cases of insurance help to retain the value of the house. It also grows the value that offers a good option to buyers.
5. No Stress
In Pakistan, most people feel overwhelmed by a sudden financial burden because of the damage. It can require a lot of time to look after the damage repair process and also spend a fortune. So, having insurance gives a peace of mind and the fear of losing the value of home. In this time of inflation, one can be free from the unforeseen costs or loss.
Lastly,
Lack of property insurance in Pakistan caused distress for many residents and also the property owners. The insurance market has evolved during this time and has facilitated a lot. Property insurance has acted like a shield against all types of natural disasters like heavy rains, floods, earthquakes, etc. Also, insurance will help you to cover man-made catastrophes like vandalism, electrical fires, or theft. It is better to have insurance but from a trusted insurance company. You can compare the policies of various companies to have the best. Read the past customer reviews of the insurance company before choosing one. We hope you are convinced to have insurance, so have the best luck with you.
