I live in Chennai. My ground floor house is flooded, damaging my electrical equipment. Will my fridge, TV, Jewellery and other equipment be covered by home insurance?
Reply by Tarun Mathur, Chief Business Officer, General Insurance, Policybazaar.com
Natural disasters are increasingly wreaking havoc across various regions of the country. Events like cyclones, earthquakes, and floods, once sporadic over several years, are now occurring with greater frequency within shorter periods. As a result, home insurance has shifted from being optional to becoming imperative, especially for people living in India. As you mentioned, you live in Chennai, given the unpredictable nature of floods in the region, buying comprehensive home insurance is prudent to protect both the structure as well as the contents that make up your abode.
In India, home insurance commonly covers both structure and contents, offering comprehensive protection. This insurance is available to homeowners and can be extended to rented homes. A robust home insurance policy acts as a shield, safeguarding your home against potential risks, including structural damage from natural calamities or unforeseen disasters. Moreover, it includes coverage for belongings and in-house possessions like jewellery, furniture, electronics, gadgets, and household appliances such as TVs, refrigerators and more.
Home contents insurance extends its coverage to various scenarios, encompassing risks like fire incidents, equipment malfunctions, and accidental damages as well. It offers protection for nearly all valuable items and personal belongings within the home. Nowadays, certain insurance plans may include coverage for fine art pieces and provide protection for specific high-value items, with the insurer agreeing to pay the agreed-upon value. Depending on policy terms or choosing some add-ons by paying a little extra, it also safeguards portable assets such as mobile phones, computers, bicycles, and more.
Besides this, the policyholder must understand that the potential cost of refurbishing your entire home after a catastrophic event like a floodfar surpasses the premium paid during the policy period. When deciding on the coverage amount for both building and contents, always remember to consider factors like house type, location, and the value of possessions. The premium calculation involves various parameters such as house age, structure type, construction costs, etc. Here’s the breakdown:
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The sum insured for the property structure is = built-up area X Cost of construction per square foot (as on the date of policy purchase)
For instance, if your property area is 100 square feet and the insurer’s construction rate is Rs 500 per square foot, the sum insured for the property structure would be Rs 15 lakh.
The sum insured for house contents is = The assets’ actual cash value (ACV) or the current market value minus the depreciation based on usage.
Your home isn’t just a shelter; it’s an emotional treasure. So, perceive home insurance as an investment in safeguarding your most valuable asset rather than considering it a mere expense.
Take your time to research online options, focusing on details like premiums, claim settlement ratios, and policy inclusions and exclusions. Do not forget to delve into the fine print! Carefully consider every aspect that makes your home special, ensuring protection without any unforeseen surprises.
(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)