Fire and special perils. The house is protected from damage caused by fire, lightning, impact damage, explosion, and natural calamities such as storm, cyclone, flood, earthquake, landslide and bushfire. Loss due to riot, strike, landslide, bursting and overflowing of water tanks, apparatus and pipes and missile testing operations is also covered.
Burglary and theft cover. Household insurance also offers cover to the contents of your house against burglary and theft. Items such as jewellery, silver articles and precious stones kept under lock and key are covered.
Personal accident cover. Under this policy, you and your family members can avail of protection against accidental bodily injury leading to disablement (either permanent or temporary) or death. Additional benefits for damage to clothing, dead body carriage cost, ambulance charge, loss of employment, education fund for children, rehabilitation cost for insured person to adjust to injuries, and modification cost of house or vehicle following damage are also available.
Loan payment protection cover. In case of total disability of the insured person due to sickness or injury, this policy provides for repayment of equated monthly instalments (EMIs) for loans against various assets such as house, vehicle, and consumer durables for up to 12 months.
Public liability. Sometimes, you could unintentionally damage public property, or cause accidental death or bodily injury. Compensating for such damages can prove to be a heavy financial burden on an individual. To protect yourself against such liabilities, you can buy public liability cover. This section also covers your legal liability as a tenant under tenancy agreement with your landlord for damage to building, electrical installations and other fittings in the house due to the perils covered.
Optional or additional covers
Terrorism cover. By paying a little extra premium, you can get a cover against damage to the structure and loss of contents within your house due to acts of terrorism.
Alternative accommodation cover. The insurer will compensate you for the rent that you have to pay if you are forced to shift to an alternative accommodation because your home has been destroyed or damaged by any of the calamities against which the structure is insured. The maximum coverage offered varies from company to company. ICICI Lombard offers a maximum coverage of up to Rs 1 lakh for up to six months.
You can buy optional cover for terrorism and for alternative stay arrangements in case of damage to your building by paying an extra cost above the basic premium. These additional covers are inexpensive, ranging between Rs 500 and Rs 1,500 depending on the cover and amount of insurance.
Exclusions
Home insurance policies generally do not provide cover against loss or damage, whether direct or indirect, due to war, invasion, acts of foreign enemy, hostilities (whether war is declared or not), civil war, rebellion, revolution, military coup or usurped power, or civil commotion and incidents of loot or plunder thereafter. Loss or damage caused by depreciation or wear and tear is not covered. Loss or damage, directly or indirectly, caused by nuclear weapons, radiation or contamination by radioactivity from nuclear fuel or from nuclear waste is not covered. If you have wilfully destroyed property, you will not get compensation.
Apart from the above, insurance companies usually don't cover loss or damage to manuscripts, plans, drawings, securities, documents of any kind, stamps, coins, paper money, deeds, ATM cards, credit cards, consumable articles, livestock and motor vehicles. Loss, destruction or damage to antiques, pictures and other works of art is also not covered.
How sum insured is calculated
House structure. A home insurance policy insures the structure of your home for its reconstruction value. Reconstruction value is defined as the cost that would be incurred in reconstructing the house if it gets damaged. The sum insured is calculated by multiplying the built-up area of your house with the cost of construction per square feet. For instance, if the built-up area of your house is 1,000 sq ft and cost of construction is Rs 800 per sq ft, the sum insured for the structure will be Rs 8 lakh.
Contents within the house. The value of the contents within, such as furniture, durables, clothes, utensils, jewellery and so on is estimated on market value basis - the current market value of similar items after depreciation.
Claim settlement
In case of an eventuality, inform the insurance company at the earliest, and definitely within 14 days of occurrence. Furnish details of amount of loss or damage. The insured person must at his own expense produce documents and proof to substantiate the claim. Information regarding the origin and cause of loss must be provided.
In case of burglary, lodge a complaint with the police and take all steps within your power to apprehend the guilty and recover the property.
In any action suit or other proceedings in case the insurer rejects a claim, the burden of proving that such loss or damage is covered is upon the insured. Therefore, we suggest that you keep video footage of your house and the belongings within it, so that in case a dispute arises you can produce it to prove your point.
If required, the insurance company can appoint surveyors or investigators to estimate the extent of loss or to trace and recover the property that was lost.
Cancellation of policy
The insured can cancel the policy any time during the term of the policy by forgoing a part of the premium, as mentioned in the policy document. Usually, a minimum of 10 per cent is deducted from the premium paid if the policy is cancelled within 15 days of signing the insurance contract. If the policy is cancelled after nine months, the insurance company usually does not return the premium.
While you may regard the likelihood of damage to your house, or theft of the contents within it, as a remote possibility, such eventualities do occur. If you have the foresight to buy a home insurance policy, such events will not cause you a severe financial setback.
