With calamity striking ever so often damaging houses and property, especially during monsoon, are you planning to take home insurance cover to guard against losses? Home insurance is often a neglected insurance cover, but is one of the vital one’s that you should have in your portfolio.
If you are planning to buy a home insurance cover, what should you be looking for. FeMoney talked to experts to find out.
“Covers available under home insurance are comprehensive and can be customised to cater to needs of each customer. It is recommended that all customers consider opting for a comprehensive home coverage from a reputed company that has a good track record of efficient claims servicing to its customers,” says M Ravichandran, President, Insurance, Tata AIG Insurance Company told FeMoney.
Home insurance provides a wide range of protection for you home and contents. While the home and its contents are covered, home insurance also includes loss due to events such as fire, lightning, riots, strike, malicious damage, earthquake.
Yashish Dahiya, CEO and co-founder, Policybazaar.com, however, advises one to look at exceptions provided in the cover before purchasing. “If you are buying home insurance, you should ideally ensure that the policy covers natural calamities such as earthquake, flood. You can consider purchasing add-ons to suit your needs,” says Dahiya.
Ravichandran points out that two types of home insurance covers are available in the market, one on reinstatement basis and the other on market value basis. “Insurance bought on market value basis insures assets but will pay for claims after factoring in depreciation. It’s better to insure your house and its contents on a reinstatement basis as it will pay out the entire claim amount,” he said.
Ravichandran says at the time of buying home insurance, individuals should make a list of all items that they want to insure and also value their items and give a sum insured figure to the insurer. In the event of a claim the insurer will send a surveyor who will assess the damage and pay the sum insured. Appointing a surveyor for a claim shall be at the discretion of the insurance company. In small claims insurers usually don’t send the surveyor and pay the claim immediately. “You need to be adequately insured; whether it’s the structure of the building or its contents. So if your claim far exceeds the sum insured, the insurer will consider it under insurance and reduce the claim amount accordingly,” says Ravichandran.
For example, if you calculate the contents of the house to be valued at Rs 1 lakh, but at the time of making a claim the surveyor finds that the cost of replacing or repairing is Rs 2 lakh you will be considered under-insured by 50 per cent. So the insurer will pay only 50 per cent of the sum insured that is Rs 50,000. Therefore, it’s important to make sure you are not under insured.