A home insurance policy with a sum assured of more than `50 lakh would require physical inspection of property, depending on the insurer.
With floods ravaging several states this year, the Insurance Regulatory and Development Authority of India (Irdai) had instructed all insurance companies last month to ensure that all reported claims are registered and eligible claims are settled expeditiously. It had also instructed that simplified process including relaxations in the requirements be considered to expedite claims settlement.
Insurance companies say that the total claims from this year’s flood-related losses could be over `800 crore. In fact, Cyclone Fani that hit Odisha in April has already led to insurance losses of almost `3,000 crore till now. Irdai had also instructed companies to set up special camps to enable immediate filing of claims.
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With natural calamities getting more frequent, experts suggest that individuals should take home insurance given the large sums of money sunk in buying a house. Home insurance is an under-purchased product as awareness is very low despite the fact that the National Disaster Management Authority estimates that 60% of the Indian landmass is prone to quakes and 8% susceptible to cyclones. Also, non-life insurers do not aggressively market home insurance products the way they do for health insurance.
What a home insurance covers
A home insurance policy will provide cover for loss or damage of the house and its assets. In fact, a comprehensive home insurance policy will protect your home in case of terrorism, fire, and natural calamities such as the recent floods, earthquakes, storms, etc. It is better to buy a cover right after taking possession of the house as insurers refuse covers for houses that are more than 30 years old.
A home cover has two basic features: building and content. The former provides insurance for the building structure against damage and the reconstruction cost is paid if the building suffers complete destruction. It would cover damages caused by fire, explosion and natural calamities such as storms, floods, cyclones or earthquakes. The content insurance will include jewellery, electronic goods, clothing and furniture.
An individual can buy and renew a home cover even online without any documentation and physical inspection of property, unless someone is opting for a higher sum assured or a specific package.
A home insurance policy with a sum assured of more than `50 lakh would require physical inspection of property, depending on the insurer. In case of apartments, the housing society should insure the structure against natural calamities. This will come in handy in case of any damage to the physical structure. The cover would only take care of the construction cost of the building. People living in individual houses or buildings that are not part of any housing society can opt go for structure home insurance.
Read fine print before signing
The process of buying a home insurance is very simple. First, decide the coverage and come at a valuation. Declare accurately the value of assets that are being covered for the right sum insured amount. Then compare the various policies offered by insurance companies and shortlist the one that is most suitable. Choose the deductibles wisely as a higher deductible will reduce the premium but will become an out-of-pocket expense in the event of claim.
Read the terms and conditions carefully, especially what the policy includes or excludes and the claim process before finalising the policy. For instance, for most insurers claim against burglary will not be valid if the house was not occupied for over 30 days. Claims will be rejected if it is proved that household help or anyone in the family of the insured is involved in the burglary.