Bajaj Allianz General Insurance has launched a new home insurance plan which covers most risks, including earthquakes and terror attacks. It has no compulsory excesses, which means the insurer will bear the full cost of the claim without requiring the policyholder to pay a portion of the claim amount from his pocket. Apartments and independent buildings can be covered under this policy.

Features This plan from Bajaj Allianz makes for a comprehensive home insurance cover. Unlike most other plans that cover only specified perils, this plan covers almost all risks. The list of exclusions is short. Theft in a house that was left unoccupied for more than 45 days, losses arising from radiation and loss or damage to livestock and motor vehicles are the eventualities not covered. Also, damage due to structural defects in the case of buildings and defective workmanship of the contents are not covered. Independent houses can be insured on a reinstatement or indemnity basis. For apartments, there is also the option of insuring the house on an agreed value basis.

Under a reinstatement plan, the sum insured is calculated by multiplying the area of the building by the cost of construction on the day the policy is taken. When there is a loss/damage, the policyholder will be paid an amount equivalent to what he spent on reconstructing the building (as at the time of completion). In case of an indemnity cover, the policyholder will be reimbursed for cost of reconstructing the building (as at the time of completing the construction), minus depreciation in the value of the building (at the time of loss).

Our take To take care of an increase in the cost of the building during the policy term, both reinstatement and indemnity covers offer an option for escalation in the sum assured up to maximum of 25 per cent of the sum insured at the time of inception of the policy. Reinstatement and indemnity covers are given by other insurers too.

What is new in Bajaj Allianz’s policy is the option for arriving at the sum insured based on an ‘agreed value basis’. Here, the house is insured for a sum equivalent to the value of both the building and the land.

And in case of a total loss situation (where the building is completely destroyed), the insurer will buy the apartment from the policyholder for a guideline value-based price (which is the value mentioned in the ready reckoner for property tax and stamp duty by the State Government)

The other differentiating factor for this policy is that you need not provide the company with bills and documents validating the purchase of contents in the house, provided you opt for a sum assured above ₹5 lakh. Also, there is an inbuilt cover for expenses on rent in case an alternate accommodation has to be found. The building insurance cover from Bajaj Allianz comes at an attractive price. The cover for a ₹25 lakh apartment on reinstatement basis comes for about ₹1,100 for a year. Other plans available in the market charge a premium of about ₹1,500-1,700 for the same sum insured. For contents insurance, however, the premium for Bajaj Allianz’s policy is higher. The premium is ₹3,652 for contents worth ₹5 lakh covered on indemnity basis. Other policies that offer indemnity cover for contents worth ₹5 lakh charge a lower premium of about ₹1,500. One reason for the high cost could be because the plan is more comprehensive than others in the market.

Besides, it doesn’t ask for bills for the insured contents if the value is ₹5 lakh or above. Also, if the insured contents are worth over ₹5 lakh, in case of damage, it replaces the old item with a new one.

When choosing between different options in the plan however think twice if you need the ‘agreed value basis’ cover. There is only a low probability of a building being completely destroyed and you wanting to abandon it.

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