Why it is crucial to take a ‘fire and allied perils’ cover

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SummaryYour home is undoubtedly the most prized possession as you, usually, spend nearly a third of your savings in getting that ‘ideal’ home.

Your home is undoubtedly the most prized possession as you, usually, spend nearly a third of your savings in getting that ‘ideal’ home. There are a lot of sentiments and emotions attached to the home and, therefore, it is absolutely important to take its care. In the backdrop of the festival of lights, one must consider not just the joy associated with Diwali, but also take adequate steps to ensure that mishaps that occur due to firecrackers are limited.

You would have heard of the numerous instances during Diwali in the last few years where firecrackers have wreaked havoc on one’s lives and property. While life is covered through various policies like life insurance and mediclaim, personal property and assets are ignored.

The assumption that bursting of crackers during Diwali may not damage the house entirely may be acceptable, but this same cracker can cause severe damage to the contents of your house. A wayward rocket entering one’s house in Diwali can set him back by few thousand or lakh of rupees, depending on the extent of the damage.

To ensure that home owners are protected from such unforeseen incidents, a fire and allied perils cover is available under home insurance. This cover is offered for both the structure and also the contents of the house and can be taken both together or on a standalone basis. The fire and allied perils cover provides protection to the structure and the contents against fire, earthquake, floods, inundation, storm and 14 such other perils. In increasingly unpredictable times, it is wise to get your house covered by this policy.

The basis of deciding the sum insured for the structure is the area of the house measured in square feet multiplied by the reconstruction cost, which is approximately R2,000 per square foot today. The premium for a R1 lakh sum insured will be a mere Rs 60 plus tax for a year. The cover for the contents can be taken by providing a listing of all the contents in the house and putting a sum insured against each.

There are some long-term policies also available for structure where the cover can be provided for 10 years. The fire and allied peril cover is basic and the simplest of all the covers in the home insurance basket. It is also one of the most inexpensive ones available in the market.

During such festivals, it is also important to safeguard not the property alone, but life as well. It is advisable to buy a policy which provides coverage against accidental loss of life as well.

Such policies provide cash in case of unexpected incidents and offer hospitalisation benefits on a daily basis to the insured person. In addition to that, the plan provides active lifestyle benefits. Regular accident cover policies only cover death or partial/total disability, but such a policy covers injuries as well and pays a lump sum amount, irrespective of the cost of treatment.

The moment of truth in insurance is comes when a claim is registered. In the event of a fire loss covered under the fire insurance policy, it is recommended that the insured should notify the insurance company immediately. It is important to submit a claim in writing, giving the details of damage, other insurances on the same property and their estimated values within 15 days of the occurrence of such loss the insured.

A claim for loss by fire must satisfy certain conditions as mentioned in the policy document. Make sure your most important asset — your home — is adequately protected this Diwali, so that you can enjoy the festival of lights in all its gaiety and with a complete peace of mind.

The author is senior vice-president, Consumer Lines, Tata AIG General Insurance

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