Home Insurance

Home Insurance or house insurance is a type of property insurance that provides cover to the private residences against losses. It covers a range of situations where loss or damage to the property is caused due to incidents beyond the control of the occupants of the house.

In the past few years, natural calamities like floods, earthquakes and cyclone, have come unannounced and resulted in irreparable damage to homes of millions of India. Just one such incident can cause havoc to your house and its valuable contents. Even if you live in a region which is not prone to any natural disaster, your abode may still be exposed to risks like; faulty wiring, accidental fire, burglary, riots, and other unexpected threats. Therefore, buying a home insurance policy is existential to your overall well-being in the face risks.

Home insurance acts as a safety net, covering your home and its precious belongings. It provides financial support to you and your family when you need it the most. Purchasing the right home insurance plan ensures you stay tension free from any unforeseen damage. Buying home insurance can help the insured go through the rebuilding process quickly as well.

Home insurance also known as property insurance or homeowner insurance covers the structure as well as the content of the home from unexpected loss damage caused due to both natural and man-made causes. The losses can be the result of theft, burglary, fire accident, earthquake, flood etc. A house insurance policy provides coverage for your own house, rented house, apartment or even luxury mansion you may own.

Home insurance policies are usually valid for a fixed period, for which the insured pays a premium to the insurance company. The premium insured has to be pay is decided on the basis of potential risks associated with the home and the necessary precautions adopted for protection of the home.

A comprehensive home insurance policy is an amalgamation more than one policy and protects the structure, contents and losses due to other accidents at home. Homes are usually susceptible to fire, natural disasters, terrorist attacks, burglary, etc.

Home insurance covers you against a lot of natural disasters like; monsoons and floods, fires, earthquakes, and other weather-related damages. It also covers you against and made incidents like; riots, arson, strike, terrorist act, war etc. Whatever size, location, and other security features your property may have, there still looms the danger of fires, floods, or burglaries.

• Coverage against natural calamities.
• Coverage against manmade calamities.
• Covers fine arts.
• Covers personal liability.
• Coverage for accidental damage under burglary.
• Option to cover your pets.

Building Structure Only - When you opt in for a building-only home insurance, you get covered for losses to the building only, i.e. underlying foundation, walls and roof. If the construction is damaged due to any natural/man-made perils listed under the policy, you can file a claim.

Home Contents Only - When you opt in for a contents-only home insurance policy, you get cover only for losses to your belongings like furniture and appliances etc. inside the building. You can also cover your valuable jewellery under the valuable contents clause.

Building Structure and Home contents - When you opt for this type house insurance you secure your house structure and possessions under the same policy. Policy will provide you comprehensive protection, which includes;

• Repair expenses if there is a damage to the property and/or its contents
• Reconstruction/repair costs in case of complete loss of property/contents.

Bharat Griha Raksha policy provides coverage for home building and its content. Effective April 1, 2021, IRDAI mandates all insurers to offer this policy.

• The policy covers a wide range of dangers such as most natural catastrophes like earthquake, floods, cyclone, storm, tsunami, Hurricane, landslide, fires, bushfires, impact damages of any kind, strike, riot, acts of terrorism, malicious damage of, overflowing of water tanks, pipe leakage from automatic sprinkler installations, water tanks burst and test within 7 days from the occurrence.
• The policy also offer general home content insurance, besides covering the home building.
• The policy offers 20% of sum insured for the building subject to a maximum of 10 lacs.
• Two optional covers are also offered under the policy. These are insurance for valuable content like jewellery and insurance for personal accident of policyholder and spouse due to an insured danger specified under the policy.
• The policy provides complete waiver of under insurance. This means, if the sum of the insured general home content is less than what was declared, the policy will still pay the entire amount.

Under Bharat Griha Raksha Policy, Insurer agree compensate you for the loss you suffer when unexpected events cause physical loss, damage or destruction to the structure of your home, and articles inside it. What is insured under the policy?

Actual damage: The common damages that are covered under the Bharat Griha Raksha include;

Besides above calamities, damage caused by impact of or collision caused by an external physical object such as a vehicle, falling trees, aircraft, walls structure etc. are also covered. Policy also covers any physical damage or destruction caused to the insured property by theft within 7 days from the occurrence of and caused by any of the insured events.

Associated costs: Besides actual damages, the policy covers many associated costs;

• It pays up to 2% of the claim amount for reasonable costs of removing debris from the site.
• It pays up to 5% of the claim amount, as the reasonable fees of the surveyor, architect, and consulting engineer.
• It pays for Loss of Rent and Rent for Alternative Accommodation when the home structure is not safe for living due to physical loss

Man-made disasters: Some man-made disasters like; strikes, riots, malicious damages, acts of terrorism and missile testing operations, are also covered under this policy.

Default coverage of home contents, unless opted out- Any damage to the house mostly results in damage to the contents inside the property as well. BGR offers an automatic coverage for the contents. This is 20% of the sum insured of the home building with Rs.10 lakh capping. If a policyholder does not want this feature, he can opt out.

Optional cover - In addition to the basic coverage and in-built covers, Bharat Griha Raksha offers two optional covers, namely;

• Covers valuable contents as per agreed value basis
• Personal Accident cover for insured and spouse, where insured peril results in damages to home structure and/or home contents and also results in the death of either or both of them.

Policy does not cover losses and expenses for any loss or damage or destruction of the insured property that is deliberate, willful or intentional act or omission, or by anyone on your behalf, or with your connivance.

Sum insured of the building can be calculated using the below formula:

Sum Insured: Build up area * cost of construction per square feet

For example, if the area of build is 2000 Sq. Ft. and the cost of construction Rs.1500 per Sq. Ft. then the building cost will be ₨. 3000000.

Sum Insured of Content:

Content value is considered as the actual invoice/cash value or from the replacement cost, i.e. Marker value - Depreciation cost.

Home insurance policies are available both for long-term as well as short-term, Short term policy is of one year tenure and a policy more than 1 year is categorised as long-term home insurance policies. Generally following policy tenure options are available under the home insurance:

First and foremost, the proposer of the policy should have an interest in the assets being proposed for insurance, that is, he/she should stand to lose financially in the event of loss or damage to such assets. Secondly, the proposer should submit a proposal form disclosing all details, which are true to the insured's best knowledge and other information, which the proposer may feel is relevant.

Both homeowners and tenant are eligible to take the home insurance policy. However, the coverage offered by each of this plan differ slightly for homeowners and tenants. For ex.; the owner can take the policy for home structure or only the contents of the home or both as per the coverage, whereas the tenant gets both the liability coverage and content coverage.

Though not mandatory, It is essential to purchase home insurance to safeguard your investment. A home insurance plan is a must-have under several situations for a homeowner. One such situation is when the owner of the house has mortgage, then the company who is funding this mortgage will ensure that whether your house is insured or not before lending any money.

It is important to buy a home insurance plan that provides protection against possible natural disasters in your location. If you live in an area that is earthquake prone, you have to ensure that earthquake cover is explicitly listed in the policy coverage. Similarly, coastal homes have greater exposures to typhoon, tsunamis, cyclones etc. which is why they often require additional coverage beyond what comes with a standard home insurance policy.

Home insurance offers coverage not just against natural disasters but covers man-made incidents beyond the control of insured. For example, theft, burglary, loss and damage to valuable possessions, and other adverse events such as fire due to a short circuit or an explosion due to a gas leak.

A best home insurance plan is the one that provides peace of mind to homeowners on a day-to-day basis, allowing them to enjoy living in their property without worry of an unexpected financial burden. Some house insurance companies offering insurance plans in India to Homeowners/Tenants are:

IFFCO Tokio Home Insurance

Bajaj Allianz Home Insurance

Bharti AXA Home Insurance

Cholamandalam Home Insurance

Future Generali Home Insurance

Coverage and Benefits- Most of home insurance plans cover; the Fire & allied perils, Loss of documents , Home burglary, In-transit loss or damage to household goods - Personal accident cover - Loss of rent - Coverage for pedigree pets - Alternate accommodation expenses - Loss of baggage - Third party and employee liabilities, etc.

Optional Covers- Terrorism cover, Earthquake, Escalation Clause, Loss of Rent, Pet cover, Accidental Medical benefit, Documents and Cards, Debris removal, and many more.

Plan that provided broad coverage, for both natural and man-made incidents, is always the one preferred by buyers. Home insurance should provide cover to house structure and its content. An ideal home insurance should also cover policyholder’s legal accountability, accidental damages at an affordable premium.

There are number of home insurance providers in India who offer different plans suiting an individuals’ needs. To help select and finalise, prospective buyers should check how home insurance provider fare on below parameters:

Check Premium and Coverage – Accessing risks which your home is facing or might face in the future should be your first step towards buying a home insurance policy. For instance, if you residing in a low lying area flood-prone then you should ensure that your property insurance policy is covering these risks as well. While checking coverage, it is advisable to check if the premium payable fits within your budget or not.

Check Claim Settlement Ratio - A good insurer is accessed by the turnaround time of settling claims. It defeats the very purpose of insurance, if you do not get a claim when it is required. Therefore, it is worthwhile to check the claim settlement record of property insurance providers before zeroing in on any house insurance providers.

Access Company’s Reputation - The first and foremost characteristics of a good company are that it has customer-friendly staff. Your preferred house insurance provider must have competent customer service representatives capable enough to resolve your queries quickly and toy your satisfaction. It is always important to choose an insurance provider who is well equipped to assist you at any point in time.

Home insurance covers the following contents:

Even though best home insurance plans provide extensive coverage, there are some exclusions as well. Some of the common exclusions are:

• Existing damage before buying the plan.
• Loss/damages caused due to intentional or illegal acts by you.
• Loss/damages due to nuclear perils, natural wear and tear, war or invasion.
• Loss/damages due to confiscation or government orders.

Documents required for filing a house insurance claim are:- Insurance Companies Claim Form duly completed and signed. Sequential evidence of event occurring, nature and magnitude of loss such as; First Information Report, Fire Brigade Report, Estimate of the repairers, Rent Agreement etc.

A duly filled-in claim form, building plan, fire department report , FIR in case of theft or loss, bills/receipts, KYC documents, and a cancelled cheque for receiving claim amount electronically are a few of the documents you might need depending on the type of claim.

Home insurance can offer the following advantages and benefits:

Extensive protection- With home insurance, you not only ensure coverage to the structure of your home but also its extensions like garage, shed, and compound too. You can also opt-in for policies add–ons like content insurance, insuring your household items like; furniture, electronics, and home appliances as well.

Coverage against natural disasters - One of the main advantages of house insurance is that you enjoy coverage against losses caused due to such unforeseeable events. These events can be a natural calamity like an earthquake or flood, or man-made event like riots, arson, strike, terrorist attack etc.

Coverage against theft - Theft is another major concern that keeps homeowners worried all the time. Fortunately, home insurance also covers you against losses due to theft or burglary, some plans even covers the property of your domestic helps.

Cost–efficient protection - Investing in a home insurance policy can pay off when you need it the most. The competitive rates of home insurance now a days, make them worth buying, especially when you look at the coverage it provides in return.

Liability coverage - Your home Insurance policy also covers you against any claims that may arise due to damage to third–party property or out of accidental death of third- party.

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