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Insurance Article

Building a Protective Wall around your Home with Home Insurance Policy

March 28 2013

These days, the trend is to install sophisticated locks, expensive fire extinguishers, security cameras, electronic alarms, and even getting police verification for domestic help recruited at home. However, we all know how protected a house is despite the installation of hi-tech security systems and various other protection measures. None of these products will eliminate the risk of thefts and damages completely. And what about the recurrent earthquakes and tsunami risks? The risk of flood in vulnerable areas cannot be ruled out. Natural calamities are out of human control.

home insurance policies would consider the cost of reconstructing the house. Did you know the actual cost of securing your home including its contents is affordable? Yes! And surprisingly, the cost is as low as 5 INR per day! Spending this meagre amount will insure you for a sum 9 lakh INR (approx).

The policy also plays a vital role in covering up your financial losses in the event of a disaster. But unfortunately, home insurance policies are not a priority for Indian home owners. This is also the reason most home owners are left with nothing in case of an accident, theft or any other problem that strikes.

If you have already decided to buy an insurance plan, here are some tips to follow in order to make your investment a profitable affair.

The Cover for Structure

Home insurance policies usually cover your house against risks such as floods, thefts, fire, malicious damage, earthquakes, and a lot more (read terms and conditions before buying a policy). A home insurance plan can be categorized into two parts. The first one covers the structure and the second part insures its content. Remember that insurance plans cover your home for cost of reconstruction. It will not cover the market value. Here, you need to focus on getting a cover that is sufficient to reconstruct the house in the event of any damage experienced by the structure.

Location of Property

The reinstatement value also depends on the exact location of the property. The premium rates charged are standard. But the sum assured varies from location to location. This is because of the variation in construction cost. If you do not own the property, it is wise to go for an insurance plan that only protects the contents inside. For flood prone or earthquake prone areas, the premium charged may be higher. Basement may not be insured as it is categorized as high risk area.

Home Insurance Renewal

Buying a home insurance plan safeguards the building and its contents. However, it is important to upgrade the policy from time to time to ensure maximum benefits of the cover. Home insurance renewal process is easy and can be done online.

The Features of a Standard Home Insurance Plan in India

The home insurance in India can be categorized into the following:

Comprehensive Cover

The plan will offer cover for both structure and / or contents of your home.

Cover for Contents and Structure

A cover facility is offered for contents of home (for 5 years) and the structure (10 years) against fire and related dangers, theft, and burglary.

Optional Cover

This is offered against damage and destruction due to terrorism and additional expenses of rent for alternative accommodation. One can opt from insurance for only the building of home, or the contents (belongings). You can even buy a cover that offers protection for both. The home insurance policy in India covers the losses to the structure and/or contents of your home incurred due to natural and man-made calamities.

The following fire and special perils are covered:

  • Fire
  • Impact Damage
  • Lightning
  • Aircraft damage
  • Explosion / implosion
  • Storm, Typhoon, Cyclone, Tempest, Tornado, Hurricane, Flood and Inundation
  • Riot, Malicious Damage, Strike,
    Bush Fire
  • Bursting and/or overflowing of water tanks, apparatus and pipes
  • Leakage from automatic sprinkler installations
  • Subsidence and Landslide including Rockslide
  • Missile testing operations

The Earthquake Home Insurance Cover

The plan covers loss or damage (including loss or damage by fire) to the property insured. The cover is also valid for landslide and rockslide. It will not cover damage caused due to flood or overflow of the sea, lakes, and reservoirs.

Burglary and Theft Cover

The home contents are covered against loss due to burglary or theft. The company will also cover the loss incurred due to attempted burglary. The plan will cover you against jewellery loss, loss of silver articles and even precious stones kept under lock and key.

Optional Home Insurance Covers

The Terrorism Cover

It covers damages and losses to the structure as well as contents of home due to acts of terrorism.

Additional Expenses

The cover is offered for rent going towards alternative accommodation in the event where you are forced to shift into an alternative accommodation owing to home damage. The insurance company will pay for additional rent. The maximum cover is up to 1 Lakh INR for up to 6 months. This cover is available only if you insure the structure of your home.

Exclusions from Home Insurance in India

  • Wilful demolition/damage of property.
  • Loss, destruction or damage caused due to regular wear and tear.
  • War related damage and destruction.
  • Losses during the period under which the home was unoccupied for over 30 days without prior notice to the insurance company.
  • Loss of cash, antiques, bullion, painting, and works of art.

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