Securing the home,while you are away

Your spirits dampen. You get worried for your most valuable assets,your house and valuables inside the house.

So how to enjoy your vacation leaving your worries behind?

The answer lies with Home Insurance. It is important that you insure your house and the contents like furniture,fixtures,white goods and other valuables of the house. This will take care of your most important and valuable investment,your home where you have invested your lifes saving. Looking at the spiraling real estate prices now,it will become next to impossible to recreate this asset.

Even the cost of replacing the contents parked inside can take huge toll on anyones finances. Most of us run around taking insurance for smaller things like mobile phones and laptop but not all of us think of buying insurance for the biggest investment. A home insurance is a comprehensive insurance policy which covers both,the structure as well as the content of the property.

What is covered by Home Insurance policy & who can buy it?

A home insurance policy covers the structure and the content of the home for the entire natural and manmade calamities. The calamities covered range from anything from fire,lightening,aircraft damage,earthquake or floods causing damage to the structure and the contents of the home to burglary or theft of the contents only. So in case the home is destroyed by something like fire or an earthquake or any other calamity,the insurance company will pay you the cost in which one can construct the home once again. The recent example being powerful Tsunami hitting the Japan,destroying many cities and leaving millions homeless. In case,the property owners had taken home insurance policy for their homes,the insurance company would have paid for the cost of construction of the new property on the same piece of land. Along with that the insurance company would have paid for not only contents like furniture,TV,fridge,air-conditioners but also valuables like jewellery etc. in the home which were insured according to the depreciated value of the contents.

Even if you are staying on rent,you should take home insurance to protect the contents inside the house. You can also get your home covered against terrorism on payment of additional premium. Even if you are planning to shift to another place on rent,it can also be covered on payment of additional premium. This works well for people who are staying in independent houses like bungalows. So what about the people living in flats in housing societies?

These people cannot buy home insurance for their flat,the society needs to take the policy which covers all the flats in the society to cover the structure of the property against any perils.

What is not covered in the policy?

This policy will not cover any damage arising out of war or war like situation,not even y military rising or rebellion or usurped power. It will also not cover loss to the property directly or indirectly caused by radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste.

But the losses in Japan will be covered caused due to nuclear radiation under this policy because the main cause of destruction was tsunami and nuclear radiation was its aftermath. The claims are paid due to main cause of the destruction which in case of Japan was the tsunami.

Any forceful destruction of property will not be covered like loss due to pollution or contamination. In case people keep cash and share certificates at home,then this also will not be covered under the home insurance policy.

What is the sum assured for home insurance?

The sum assured for structure in case of home insurance is not based on the market value of the property but is based on the cost of construction of the property. So incase,your bungalow is of 2000 sq feet and the cost to construct the same is Rs. 5000 per sq ft,then the cost of construction will be Rs. 1 crore. Thus,the sum assured of structure for home insurance should be Rs. 1 crore and not Rs. 1.5 crore for which the bungalow is bought for. In case of content insurance,the sum assured is the depreciated value of the electronics and not the value at which you purchased the electronic. Also it is always better to keep the bills handy as it helps for quicker claim settlement. The cost of construction has gone up in the last few years by almost 30% besides rates of electronic items.

Now with your plush interiors,HD TVs,4-door refrigerators,highly advanced Acs,it has become all the more important to insure your homes. You can approach any of the general insurance company to buy a home insurance plan for your homes and its contents.

Sum Insured for the structure How to calculate?

Total area for your home (A)

Cost of construction per sq ft (B)

Sum insured for structure  (A)*(B) (X)

Sum insured for content

Furniture (A)

Television (B)

Jewelry (C)

Fridge (D)

Other electronic (E)

Total value of content (A) + (B) + (C) + (D) + (E)  (Y)

Premium for structure (X) * multiplier (depends on various insurer provider)

Premium for content (Y) * multiplier (depends on various insurer provider)

Sum of these is the premium with applicable service tax.

Note: Content is by ApnaPaisa,India’s leading price comparison site for financial products such as loans,credit cards and insurance plans. Expressindia does not accept any responsibility or vouch for the accuracy of the same.

Byline: Abhishek Kumar Singh