A small price to protect home

Buying a house is the biggest investment for most of us. It requires maximum effort too. We must therefore ensure that it is protected against all eventualities.

A standard home insurance policy protects the property and its contents from basic eventualities such as fire, burglary. Some of the general insurance companies also cover flood and earthquake in a standard comprehensive home insurance policy.

A home insurance policy can be availed in all of the following scenarios:

a) When you own a home: Coverage to the structure as well as the contents.

b) When you own a home and the same is on rent: Any damage to the structure of the house and contents owned by you as a owner can be covered by the policy. To cover the contents brought in by the tenants, they will have to purchase a separate policy covering their belongings.

c) When you are a tenant: Though you might not have a house of your own, you do spend a significant amount of money on electronic goods and home furnishings. It is important to insure these against burglary or any other eventuality. There are a few insurance companies which also offer insurance against electrical breakdown for these by charging some additional premium.

Compensation

While a standard insurance policy will provide basic coverage, there is a limit to how much the policy holder will be compensated. While the lower cost of insurance might lure you into buying a standard home insurance policy, you will always stand the risk of losing ‘valuables’ in the house.

Paying a marginally higher premium, however, will not only insure the structure and the regular contents of the house but also valuable items such as precious jewellery, antique furniture, electronic items. In case of an eventuality, you will be compensated with the market value of these, post factoring the depreciation in value of some items.

It is important to keep in mind and be attentive to a few things while purchasing the policy. It is crucial for you to find out the home's replacement cost or re-instatement value in insurance terms. The home insurance policy must cover the cost of rebuilding the damaged structure and not the market value of the property.

A simple way of ensuring that the home contents are adequately covered is by checking that the insured’s home contents amount matches up to what it would cost to replace the items at their current market price.

Post buying home insurance, the most critical thing to do is to make an inventory (list, video or photos) of all valuables registered with the insurer. This can go a long way in ensuring hassle-free claim settlement. In the event of an eventuality, if the home is lost in a covered peril, this list will make the task easier for you as well as the insurer. Crisis struck, you can focus on more important issues, while your insurer takes care of the claims.

(The writer is Chief- Underwriting & Claims, ICICI Lombard GIC )