Home Insurance

Home or house insurance is a type of property insurance that provides cover to the private residences against losses. It protects against various scenarios where property loss or damage occurs because of events outside the control of homeowners.

In the past few years, natural calamities like floods, earthquakes and cyclone, have come unannounced. It resulted in Incurable damage to homes of millions of India. Just one such incident can cause havoc to your house and its valuable contents.

Your home can be at risk from various unexpected dangers, even if you live in a safe area. These dangers include bad wiring, fires, burglaries, protests, and more. 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 called property or homeowner insurance, protects both the structure and contents of your home. It covers from unexpected loss damage caused because of both natural and man-made calamity. The losses can be the result of theft, burglary, fire accident, earthquake, flood. 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 fixed period, for which the insured pays premium to the insurance company. The insurer determines the premium to pay based on potential risks associated with the home. And the necessary precautions adopted for protection of the home.

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

Home insurance covers you against lot of natural disasters like, monsoons, 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 have, there still looms the danger of fires, floods, 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 construction is damaged because of any natural/man-made calamity listed under the policy, you can file 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 of insurance you secure your house structure and possessions under the same policy. Policy will provide you comprehensive protection, which includes;

• If there is a damage to the property and/or its contents, it covers the cost of repair.
• 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 protects against many types of natural disasters, like earthquakes, floods, cyclones, storms, tsunamis, hurricanes, landslides, fires. It also covers damage from impacts, strikes, riots, terrorism, and malicious acts. Additionally, it includes damage from overflowing water tanks, pipe leaks from sprinkler systems, burst water tanks, and tests conducted.
• The policy also offers general home content insurance, besides covering the home building.
• TThe 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 insurances cover valuable items like jewellery and provide coverage for personal accidents. It covers both the policy holder and their spouse because of specified risks outlined in 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.

With the Bharat Griha Raksha Policy, you will receive reimbursement for damages or destruction to your home and belongings. This reimbursement covers unexpected events. What is insured under the policy?

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

Besides the disasters mentioned, this also includes damage from hitting things like vehicles, trees, planes, or buildings. The policy includes theft damage to the insured property within 7 days of an insured event.

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 claim amount, as the reasonable fees of the surveyor, architect, and consulting engineer.
• It pays for Loss of Rent and Rent for Alternative Habitation when the home structure is not safe for living because of physical loss.

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

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 policy holder 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 coverage is included for the insured and their spouse. It applies if a covered peril damages the home structure or contents. Additionally, it results in the death of either or both of them.

The policy excludes losses and expenses for any deliberate, willful, or intentional act or omission. It also excludes damage or destruction caused by anyone on your behalf. Furthermore, it excludes damage or destruction caused 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 - Deflation 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 grouped as long-term home insurance policies. Generally following policy tenure options are available under the home insurance:

Firstly, the proposer must have an interest in the assets proposed for insurance. This means they should stand to lose financially if the assets are damaged. The policy holder should have a financial stake in the assets.

This ensures they have a vested interest in protecting the assets. It also reduces the likelihood of fraudulent claims.

Secondly, the proposer submits a proposal form disclosing all details. The details must be true to the insured's best knowledge. The proposer includes other relevant information they feel necessary. This ensures transparency and accuracy in the insurance process.

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 example, the owner can insure the home structure or its contents separately. Tenants typically receive liability and content coverage. Coverage options vary based on individual needs. Owners and tenants can tailor policies accordingly.

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 situation arises when the homeowner has a mortgage.

The lending company requires insurance before lending. They ensure the house is insured. This ensures protection for both parties.

This is important to buy a home insurance plan that provides protection against possible natural disasters in your location. If you live in an earthquake-prone area, ensure your policy includes earthquake coverage. Explicitly list earthquake cover in the policy. This ensures protection against earthquake damage.

Similarly, homes near the coast face more risks, Such as typhoons, tsunamis, and cyclones. They often need extra coverage. Beyond what standard home insurance offers.

Home insurance offers coverage not just against natural disasters but covers man-made incidents beyond the control of insured. For instance, theft, burglary, and damage to valuables. Also, accidents like fires from short circuits or gas leaks.

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- Home insurance covers fire, burglary, document loss, and personal accidents among other risks in many plans. They also cover damage to household items during transportation, lost rental income, and liability for others and employees. Additionally, some plans may cover expenses for alternate habitation, loss of baggage, and even pedigree pets.

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

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 policy holder’s legal accountability, accidental damages at an affordable premium.

A 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 – First, assess risks your home faces or may face in the future before buying insurance. For example, if you live in a flood-prone area, make sure your property insurance covers these risks. 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 aim of insurance, if you do not get a claim when it is required. So, it's important to investigate the track record of property insurance companies before choosing one.

Access Company’s Reputation - The foremost characteristics of a good company are that it has customer-friendly staff. Your chosen home insurance company should have helpful customer service reps who can answer your questions satisfactorily and promptly. This 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 because of intentional or illegal acts by you.
• Loss/damages because of nuclear perils, natural wear and tear, war or invasion.
• Loss/damages because of 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.

For digital claim processing, you may require various documents. These include a filled claim form, building plan, fire department report, theft FIR, bills, receipts, KYC documents, and a canceled cheque.

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 choose additional coverage options like content insurance for items such as furniture, electronics, and appliances.
• Coverage against natural disasters - The main advantages of house insurance is that you enjoy coverage against losses caused because of such unlikely events. These incidents can be natural disasters like earthquakes or floods, or man-made events like riots or terrorist attacks.
• Coverage against theft - Theft is another major concern that keeps homeowners worried all the time. Thankfully, home insurance also protects you from losses because of theft or burglary. Some plans even cover the property of your domestic helpers.
• 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 protects you from claims because of damage to third-party property or accidental death.

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