By Neeraj Gupta
Home is the only place in the world where you feel safe and which is full of memories and comfort. Everyone desires for one’s home to be a better place and for the same reason many people either go for timely renovation or have expensive valuables to make it more beautiful. You also install best security measures to protect our haven, like high-end locks, electronic alarms, fire extinguishers and what not. However, all are aware that despite the best security tools we use, the risk of theft or damages due to natural disasters can never be eliminated. This is where home insurance kicks in to provide a comprehensive protection to your house and valuable items in it.
Home insurance isn’t something we think of every day, but whether we are buying it for the first time, or renewing the existing policy, ticking off some important things can make life easier. Here is the lowdown of important things that should be kept in mind before purchasing a home insurance.
Type of Policy you need
When it comes to buying insurance, your home is divided into two categories: structure and contents. Structure insurance covers the physical structure of the building, as well as permanent fixtures and built-in things, whereas content insurance covers valuables in the house such as furniture, jewellery, artwork, collectables, mobile, laptops and electronic items etc. If you are an owner of the house, then it is best for you to buy a comprehensive insurance policy which covers both structure and content. But in case you are living in a rented accommodation, content insurance would work best for you.
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Make sure you’ve got enough cover
Since home insurance is divided into two categories, you need to have enough cover for both the categories. Structure insurance will pay the predefined sum assured to rebuild your house. Therefore, it is important that your sum assured is equal to the rebuild value, not the market value. For example, you have a sum assured of Rs. 50 lakh and the reconstruction cost of your house in approximately Rs.60 lakh. In that case paying Rs. 10 lakh from your own pocket can seriously dent your financial stability. Underinsurance also leads to less claim pay-out in home insurance.
When it comes to calculating the sum assured for the content of your house, the best way to calculate the value is to make a list of each item and then calculate the total value, from furniture to computers, electronic appliances, mobile phones to laptops etc. It is very important you get it right as undervaluing your contents will leave you vulnerable to financial breakdown, while an overvaluation will increase the premium of your policy which is completely unnecessary.
Ask for “New for Old” add-on
When buying content insurance, you must get ‘new for old’ cover for your belongings. This add-on feature will replace your damaged item with a new identical product, rather than reimbursing the amount for the depreciated value of old items
For example, if you file a claim for a five-year-old 32-inch television, instead of getting the amount you’d pay for a five-year-old television, you will get a brand new 32-inch television. Athough only a few insurers provide this add-on, but you must look for an insurer who can provide you with this feature.
Jewellery Cover is a must
Jewellery has been a status symbol in our society for a very long time. Typically, every individual in India has some amount of gold, be it in the form of fashion collectibles or savings and the risk of getting it stolen is always a little higher than other items in case of a burglary. Hence, it is important to protect it from unforeseen events. One should buy jewellery protection add-on with the home insurance policy. The insurer will provide a separate sum assured to protect jewellery from a burglary or theft.
Does your policy provides world-wide cover
If you have expensive items that you usually use while away from home, such as a laptop, camera or jewellery, then it is worth having these items covered against theft or damage when being used outside home other than your house or during travel. Worldwide cover add-on stretches the protection limit by providing cover for your precious things anywhere in the world so that you can travel with your belongings without any risk.
What’s not covered
Home insurance is basically to protect your home from the damage caused by unfortunate events such as storm, fire, earthquake and burglary etc. It does not work as a solution for all wear and tear. There are a few events which can damage your haven’s structure or your belongings, but your insurer would not be able to cover it. Such incidence could be normal wear and tear, damage to furniture due to termites, loss of cash, damage due to war or nuclear hazards etc.
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Compare before you buy
Last but not the least, comparing is the ultimate solution to get the best plan. Now, even if you have found a good plan in the first attempt, you must compare it with other insurer’s products to see if the product is actually giving a comprehensive solution to your requirement. It is highly possible that you may find a better plan and if not a better plan, you may end up finding a similar plan at a cheaper price. Therefore, it is always advisable to do a proper research and then purchase an insurance policy which will provide you support in case you undergo such unfortunate events.
(The author is Head of Motor and Home Insurance, Policybazaar.com)