Home Insurance

HOME INSURANCE

Cover should suffice to rebuild structure, replace contents

Recent earthquakes in the Delhi-National capital region (February 17) and in West Bengal (February 25) underscore the importance of buying home insurance. A home is often an individual’s most significant asset.

Unforeseen events like earthquakes, fires, and floods can cause devastating damage, possibly wiping out your financial security. Without insurance, homeowners have to bear the full financial burden of repairs and reconstruction.

What this policy covers

A home insurance policy covers damage from earthquakes fires, explosions, floods, landslides, cyclones, storms, aircraft damage, and acts of terrorism. It protects both the structure of the house and its contents.

After a disaster, homeowners may need temporary accommodation. Home insurance can cover relocation expenses after disasters if the policy includes a ‘living expenses’ and-on. It covers the costs of boarding, lodging, storage, and moving.

Sum insured and payout

Buy a sum insured that can meet the cost of rebuilding the house (excluding land value).

Most policies settle claims on a reinstatement value basis, which means that insurers reimburse the actual cost of repair or rebuilding. If a policy has a sum insured of Rs 1 crore, but repairs cost Rs 60 lakh the claim payout will be the latter amount. The amount paid is calculated using the carpet area in square feet multiplied by the cost per square foot of reconstruction in that region.

Periodically increasing the sum insured to match rising construction costs. For contents, the sum insured is usually decided based on the declared value of items. In Griha Raksha, the standard home insurance policy, 10 per cent of the building’s sum insured is allocated for contents. Jeweler up to Rs 5 lakh is covered without a specific declaration. Higher values require a declaration.

Selecting right policy

Buyers should identify the likely natural calamities in their area and buy a suitable policy. For instance, those living in a high seismic activity zone like the NCR must have cover against earthquakes.

Very few people in India opt for home insurance of stay protected against natural and manmade perils. Many homeowners also underestimate he coverage required. The policy must cover the full cost of rebuilding the house and replacing its contents. Supplement the main policy with riders. Also, look that claim settlement ratios of insurers.

Home insurance falls under the broader category of fire insurance. Claim settlement ratios for fire insurance available on the Insurance Regulatory and development Authority of India (Irdai) website, should be a consideration while selecting an insurer.

Exclusions, waiting periods

Buyers must be aware of what is on covered by this policy. Damages caused by seepage, poor construction quality, malicious acts if the customer, and war are not covered. Theft and burglary require an additional cover. Premiums vary based on construction materials used, age of the building coverage limits, deductibles and safety features such as fire alarms and security systems in a house.

Lastly, jewellery kept in bank lockers is also usually not covered by a home insurance policy. For that, you need to buy a bank locker protector policy.

For More Details: Pooja Manoj Gupta, visit www.giia26.com

Email: pmgiia26.com Mobile  9868944340