Owning a home is one of life’s proudest milestones for Indian families. Whether it is a flat in Gurugram, a bungalow in Bengaluru, or an ancestral house in Kerala, the home carries not just financial weight but deep emotional value. It is the space where children take their first steps, where families celebrate festivals, and where retirees dream of a peaceful future.
Yet, year after year, floods in Hyderabad, fires in Mumbai towers, or cyclones along the eastern coast remind us that our homes are vulnerable. And when disaster strikes, many realise too late that their home insurance policy was either insufficient or incorrectly structured.
Through my years of guiding Indian families, I have seen patterns repeat. People buy insurance, but unknowingly make the same mistakes that leave them financially exposed. This guide brings together 21 mistakes to avoid, illustrated with real experiences, so that your home remains protected when it matters most.
1. Failing to Renew or Update Policies in Time
One NCR family had taken a home insurance cover when they bought their flat in 2010. A decade later, they had renovated it extensively, adding false ceilings, an imported modular kitchen, and wardrobes worth several lakhs. However, they never updated their coverage. When a pipe burst during construction work in the building, water seeped in and destroyed the new interiors. The payout they received was based on the outdated insured value, covering only a small portion of the damage.
Lesson: Renewal isn’t just about paying premiums on time; it is about ensuring your cover reflects the reality of your home today.
2. Overlooking Protection for Rented Accommodation or Living Costs
During the Hyderabad floods of 2020, a tenant couple had to vacate their ground-floor rental when water entered the apartment. They spent three weeks in a hotel, racking up bills of over ₹1.2 lakh. Their insurance only covered structural damage, not alternate accommodation.
Lesson: Whether you are a tenant or a landlord, check if your policy accounts for rent loss or temporary stay expenses. Emergencies cost far more than you imagine.
3. Protecting Only the Structure, Not What’s Inside
A young IT professional in Bengaluru insured his apartment but ignored the possessions inside. When an electrical short-circuit caused fire damage, the walls were repaired under the policy, but his gadgets—laptops, gaming console, and television worth over ₹4 lakh—were excluded. He was left to replace everything from his savings.
Lesson: The home isn’t just bricks and walls. It is furniture, electronics, jewellery, and personal belongings. Protect the whole picture.
4. Choosing an Insurer Without Checking Their Track Record
One family in Pune opted for a new insurer offering a discounted premium. When a kitchen fire destroyed part of their flat, it took nearly a year and several appeals before their claim was processed. The stress and delay cost them far more than the saving on the premium.
Lesson: The reliability of the insurer matters as much as the policy itself. Always review claim settlement history before deciding.
5. Buying Based Only on the Lowest Premium
A retired teacher in Lucknow proudly told me she had insured her house for just ₹1,500 a year. But when the monsoon brought waterlogging, she discovered that her policy specifically excluded flood coverage. She ended up spending ₹4 lakh on repairs with no support.
Lesson: The cheapest cover is often the most expensive mistake. Always read the scope of coverage before signing.
6. Assuming Natural Disasters Are Automatically Included
When Cyclone Vardah struck Chennai, a businessman’s villa sustained massive damage. To his shock, the claim was denied—cyclones were excluded in his policy unless added separately.
Lesson: Floods, earthquakes, cyclones, and landslides are not always part of standard cover. Check and add what you truly need.
7. Forgetting Inflation and Rising Construction Costs
A family in Gurgaon insured their home for ₹50 lakh in 2014. By 2022, rebuilding the same house cost ₹80 lakh due to rising material and labour costs. When fire damage occurred, they received only half of what was needed to rebuild.
Lesson: Review the sum insured every few years. Your cover should match current construction costs, not past estimates.
8. Ignoring Add-Ons That Protect Valuable Items
In South Mumbai, a family’s art collection worth several lakhs was stolen during a burglary. They discovered too late that their policy excluded artwork because they hadn’t purchased the add-on rider.
Lesson: Valuable possessions often require separate protection. Don’t assume they are automatically covered.
9. Not Maintaining Proof of Ownership
A Delhi family lost gold jewellery during a robbery. The insurer asked for invoices and valuation certificates. Since they couldn’t provide documentation for most items, the payout was cut by more than half.
Lesson: Keep bills, photographs, or digital certificates for valuables. Without proof, your claim may collapse.
10. Overlooking Liability for Damage to Others
In one Gurgaon housing society, a seventh-floor leak caused water to seep into three apartments below. The flat owner had to personally compensate neighbours, amounting to ₹5 lakh. His policy had no liability protection.
Lesson: When you live in apartments, third-party liability is essential. Damage rarely stays confined to your walls.
11. Treating Insurance as a One-Time Job
A Noida family bought insurance when they purchased their home in 2009 and never revisited it. Over the years, they added smart TVs, laptops, expensive furniture, but none of this was included in the original cover. A burglary in 2021 left them devastated financially.
Lesson: As your lifestyle evolves, so should your insurance.
12. Miscalculating the Amount of Coverage Needed
Many homeowners simply use the purchase price as the sum insured. But that includes land value, which isn’t covered. One family insured their property for ₹1.5 crore, but when rebuilding after a fire, they only received ₹70 lakh because land cost was excluded.
Lesson: Insure for rebuilding cost, not purchase price.
13. Believing Land Is Part of Coverage
Another Bengaluru homeowner thought his premium included the value of the plot. When floods caused damage, he learned land is never insurable.
Lesson: Only the structure and belongings are covered—land value is outside insurance scope.
14. Paying for Appliance Breakdown Cover Without Records
A Chennai resident opted for appliance breakdown protection. When his 10-year-old AC stopped working, the claim was rejected due to missing invoice and age proof.
Lesson: Don’t buy riders that you cannot support with documents later.
15. Not Matching Ownership Details Correctly
A son insured his father’s house without transferring ownership. When a claim arose, the insurer denied settlement because the insured person didn’t legally own the property.
Lesson: Always align policyholder details with ownership documents.
16. Not Keeping a Visual Record of Belongings
One Bengaluru family faced burglary but struggled to prove what was stolen. A simple video walkthrough of their home could have made settlement smooth.
Lesson: Record a video of each room and keep it in the cloud. It can be invaluable proof.
17. Missing Out on Premium Discounts for Safety Measures
Many insurers reduce premiums if homes are equipped with smoke alarms or fire extinguishers. A Gurugram family installed these after a society fire drill but never informed the insurer. They missed out on discounts.
Lesson: Inform insurers about safety measures to benefit from lower premiums.
18. Not Knowing How to Report a Fire Incident
A Delhi flat owner faced rejection because he didn’t call the fire brigade after a minor fire. Insurers need official reports to validate claims.
Lesson: Always involve authorities immediately after a fire, even if small.
19. Being Unaware of the Fire Claim Process
One client delayed informing the insurer after a fire, thinking repairs must be done first. By the time he reported, the surveyor couldn’t verify the damage properly, leading to partial settlement.
Lesson: File claims quickly, with photos and official reports.
20. Insuring Only the Primary Residence
A family insured their main Delhi home but forgot about their Goa holiday villa. When theft occurred at the villa, they had no protection.
Lesson: Cover all properties individually, not just your primary residence.
21. Buying Without Professional Guidance
Many families buy policies online, lured by low premiums. Later, they discover exclusions they never noticed. A qualified advisor could have prevented this.
Lesson: Consultation ensures you don’t miss hidden gaps.
Closing Thoughts
A home is more than walls and a roof. It is where families live, love, and build their future. Yet, many policies fail not because insurers are unfair, but because homeowners overlook vital details.
By avoiding these 21 mistakes—updating policies, maintaining records, choosing the right add-ons, and consulting professionals—you can transform home insurance from a hollow piece of paper into a shield of true protection.
Disclaimer: The views expressed are for educational purposes only and do not constitute financial, investment, tax, or legal advice. Please consult qualified professionals before making decisions. Mutual fund investments are subject to market risks.
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The author of this article, Taresh Bhatia, is a Certified Financial Planner® and advocate for female empowerment. For more information and personalized financial guidance, please contact taresh@tareshbhatia.com
He has authored an Amazon best seller-“The Richness Principles”. He is the Coach and founder of The Richness Academy, an online coaching courses forum. This article serves educational purposes only and does not constitute financial advice. Consultation with a qualified financial professional is recommended before making any investment decisions. An educational purpose article only and not any advice whatsoever.
©️2025: All Rights Reserved. Taresh Bhatia. Certified Financial Planner®
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