Home insurance breaks into two parts. The first part is the structure and the second is the things you have in your house.
Ever come across those advertisements offering to insure your home? Insurance for your home is meant simply to cover any damage or loss hitting your house.
THE BASICS
Home insurance breaks into two parts. The first part is the house itself. The structure, the compound wall, the works are covered in case of any damage to it. The list of permissible causes for damage is extensive, ranging from broken water pipes to burglaries to earthquakes.
What is covered here is the reconstruction cost, architect and other surveyor expenses (usually up to 3 per cent of claim amount) and clearing away rubble in the wake of damage (up to 1 per cent of claim amount).
The second part is the things you have in your house. This includes electronics, furniture, jewellery or even your carpeting.
ARRIVING AT COVERS
Some policies cover both house and contents, such as the plans from ICICI Lombard and HDFC Ergo. Others offer them as separate policies, as in the case of Royal Sundaram. For most policies, you don’t need to be the owner of the house – even if you’re staying on rent, you can buy home insurance.
Cover for your house is arrived at by multiplying the square feet and the going rate of cost of construction a sq ft. Some policies don’t distinguish between cities and apply a general cost, currently at around Rs 700-800 a sq ft. Remember that you are insuring the structure of the house and not land, and so market value of land is not taken into consideration.
Insuring the contents of your house is left to you. The range of sum assured for contents depends on the insurer, but the minimum cover is Rs 1 lakh. Royal Sundaram Home Content plan, for instance, starts with a minimum Rs 4 lakh cover in its Silver Plan and goes up to Rs 11.5 lakh in its Platinum Plan. Policies also declare a maximum limit for an item.
Continuing with Royal Sundaram’s Platinum plan, within the total contents cover of Rs 11.5 lakh, for your electronics, you can claim a maximum of Rs 3 lakh. Within this, the limit for a gadget is Rs 40,000.
Makean estimate of what the stuff in your house is worth. Arrive at the approximate cost of replacing them in case of loss. This will help you decide on the amount of insurance you need to take.
PERIOD AND PREMIUMS
Policy periods and premiums vary. You can buy a one-year policy from HDFC Ergo, but SBI General’s Long Term Home Insurance stipulates a 3-year minimum. Longer periods involve lower premiums. Premium also reduces if you keep security guards or if you install a burglar alarm system.
Because premium is decided on the worth of your house and contents, range of premium is wide. But for an example, a house cover of Rs 17.5 lakh and a contents cover of Rs 2 lakh from HDFC Ergo calls for a premium of Rs 2,029 for one year.
BUYING AND CLAIMING
Buying policies is simple, quick and can be done online. No survey is conducted at the time of buying the policy.
Surveys will be done at the time of claim. If damage is caused by a burglary, then you will have to file a report with the police (FIR) and provide the same to the insurance company for your claim to be processed.
The first Rs 10,000 or the first 5 per cent of damage cost will have to come out of your own pocket. Some policies compensate for theft by domestic help, while others, such as SBI’s, don’t. Age limits to buy policies also apply.
The list of exclusions is exhaustive. Detailing the causes of damage that are not covered vary with insurers. Look at the fine print – the policy wordings, which are available on the insurer’s Web site – before you buy.
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