Published in Mint on Feb 20 2017, Written by Abhishek Bondia
My house in Delhi is insured against earthquakes and I have never missed any premiums. I want to add two rooms to the second floor. Will my existing insurance policy suffice or will I have to take a new policy? If I need to take a new policy, will I get any benefits for having had the existing policy for so long?
—Bhushan Juneja
A standard home insurance policy defines sum assured as the reinstatement cost of constructing the building.
Extending the building increases the cost of reconstruction. So, increased sum assured needs to be endorsed in the policy. You need to pay a proportionate premium for the increased sum assured and the unexpired policy period. For example, if the cost of reconstruction has gone up by 10%, and the unexpired policy period is 6 months, then 5% additional premium needs to be paid.
You do not have to take a new policy for change in sum assured. Also, standard fire insurance policy has no waiting period. So, moving to a new policy does not affect you adversely.
I have a 7-year-old car. Never made an insurance claim on it. I want to stop taking own damage insurance and go only with third-party insurance. If I want to renew the own damage part after a few years, will I still get the no-claim bonus?
—Jagruti Sinha
No, you won’t, because no-claim bonus is valid only for 90 days after policy expiry. If the policy is not renewed within this grace period of 90 days, the no-claim bonus lapses. I recommend that you continue with the own-damage part of your car insurance. I have seen a number of claims occurring because of a third-party’s negligence, which are outside your control. Moreover, the risk of total loss due to theft or other accidents cannot be completely ruled out.
To lower your premium burden, you may want to opt for voluntary deductible. Insurers give substantial discount on premium on voluntary deductible.
Voluntary deductible is a specified amount that gets deducted from any admissible claim amount. This shifts the burden of small claims from the insurance company to the insured. Since your track record is strong, small claims seem less likely.
I was diagnosed with kidney stones about a year ago. A specialist health insurance company had refused to issue a health insurance policy to me then. However, it was a misdiagnosis, and I do not have kidney stones. Can I be issued a policy now?
—Alice Baruah
Yes, you can apply afresh. The likelihood of a policy getting issued is higher. Insurers ask for history of hospitalization and past surgeries. If you have undergone any hospitalized treatment, you need to disclose it. If the insurer wants to conduct pre-issuance medical check-up, you can brief the doctor at the time of check-up, so that they are more cautious.
Further, you may want to consider larger insurers for your proposal. Often, they tend to be a little more lenient. In several cases, they issue a policy by identifying diagnosed ailments as pre-existing, thus applying a longer waiting period, or identifying select ailments as permanent exclusions. In this manner, you have a normal coverage for all other treatments.
I have been driving a motorcycle for 5 years and get 30% no-claim bonus. I want to buy a car. Can the no-claim bonus from a two-wheeler be transferred to a four-wheeler? And if I avail this bonus for a car, will I stop getting the no-claim advantage for my bike insurance?
—Raghunath P.
No-claim bonus can be transferred within the same class of vehicles. You cannot transfer the no-claim bonus of your two-wheeler to a four-wheeler. Whenever such a transfer is allowed, no-claim bonus ceases to be effective for the original vehicle.
