There is no doubt that a house is the most valuable asset one possesses. In fact it is an investment of a life time. So whether its cleaning on daily basis or maintenance or paint every year, we leave no stone unturned to make it look beautiful.
But what if your most prized possession is damaged by the earthquake or its contents gets burgled. You surely have to incur a heavy cost in reconstruction and replacing the contents. While we do not think twice before insuring depreciating assets like bike, scooters or car we often fail to get our appreciating asset and investment of a life time-the home insured. It’s equally important to get your house insured.
While public sectors insurers offering this facility includes SBI, Oriental Insurance and National Insurance, the private insurers too are not behind in the race and are of the likes of Reliance General, Tata AIG insurance and Bajaj Allianz etc. The good news is that the coverage starts as soon as the insurer receives the premium unlike health or life insurance policies where you have to wait for certain days in order to be covered. You can buy and renew the policy online these days.There are two aspects of home insurance in general.
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Under this aspect of the policy, the valuables within the house are protected against fire, theft and other kinds of damage.
As the name indicates, this part of the insurance is meant to insure the overall structure of the building. In case of damage to the building due to fire, earthquake, lightning, flood, landslide etc, the policy provides funds for reconstruction. So one can easily rebuild the home when damaged. On the other hand, if you want to insure both building and contents in it, it makes sense take one policy that covers both the aspects. Such an option is also available with some insurers. This way both will be properly protected. In order to avail this facility you should be owner of the house and not the tenant. In case you have a rented house, you can only get the contents insured and not the structure. However, there are insurers like Oriental insurer that even allows a tenant the right to get building insured along with the valuables in it.
It is not a costly affair to get your home insured. Though the premium varies across the insurers it is not expensive either. Take for instance, a house which is insured for Rs 50 lakh, and the contents belonging to it are covered for Rs 3 lakh, the annual premium for the same from L&T insurance works out to be Rs 3343. It is Rs 4738 if it is insurer like HDFC Ergo. This even includes damage due to burglary. This is a small sum to insure against any unforeseen incident, though.
Insurers do not pay for everything under the sun in lieu of the home insurance policy taken by you. That’s why it is of utmost concern to take a look at the exclusions as well. The latter mainly includes willful destruction of property, loss and destruction caused by war perils. The damaged taken place by terrorism activity is also excluded by many insurers in their normal policy. However, if protection is required from it, you can pay extra and get it covered too. Apart from it, the damaged caused to the building and content due to general is also excluded and the company would simply reject the claim arising from it. Basement area is also excluded as it is considered to be riskier. Moreover, you are not entitled for any claim if your domestic help is involved in the entire incident.
The methodology for arriving at the valuation of the home insurance cover is quite simple. The coverage amount for the structure of the home is calculated on the basis of the reinstatement value, which is more commonly known as the reconstruction value. The latter is arrived by multiplying the built up area of the property with the cost of construction per square feet. But the sum insured for the contents belonging to the house like electronic appliance, furniture, crockery and jewellery is valued on the basis of their market value after adjusting for the depreciation.
The claim process is simple. You need to provide original invoice of the stolen items along with the final police report and fully filled claim form. You can have a policy with two insurance companies too. At time of the claim, you are entitled to the sum from both, however, on a proportionate basis. Some insurers like HDFC Ergo also pay for debris removal during reconstruction. This is maximum 1 per cent of the sum insured. In some cases it can be an add on cover for which you have to fork out extra premium.
Things to watch out for
Tenure: Choose the tenure of the policy wisely. If there is a choice of opting for a long term policy, go for it. For a longer term policy of about 10 years, you can save as much as 50% of the premium besides getting away from the hassle of renewing every year.
Coverage value: Ensure that you cover areas like peripheral walls and the garage too when arriving at the sum insured.
Occupancy: In most cases insurers do not pay if your home remains unoccupied for 60 days. Some insurers are stringent and keep this limit to mere 30 days. Therefore, choose a home insurance policy which has the maximum unoccupancy limit. This way you would face no problem in claiming the damage.
Comparison: In order to get the best deal, always compare policy across insurers. The comparison should include not just the price but features as well. This way you will be able to zeroing on the best deal.
Discounts: In order to reduce the cost of the premium, try to put together the structure insurance with content insurance in one policy. Besides check if you have a 24 hour security guard and burglary alarm, this can reduce your premium upto15%.
Type of property: Not every property gets covered under home insurance policy. If your property is under construction or a ‘Kutcha’ construction, its outside the ambit of the policy. The same rule applies for the resident cum offices and the land.
Sub-limits: In case of contents there are usually sub limits. For instance, some insurers offer a sublimit of 1% in case of jewellery item. So if you have insured content for Rs 15 lakh, you would get only Rs 15000 for jewellery. Similarly, other contents too have sub limits that you should thoroughly examine and get saved from any surprise that may spring up later.