The devastation caused by repeated natural disasters inflicts deep wounds on the hearts and minds of the victims. You can insure your assets like cars and buildings.
What Is Home Insurance?
There are two types of basic fire insurance policy and comprehensive policy available to protect your home from insurance. Comprehensive policy is also called Householder Package Policy (HPP). A fire insurance policy covers your home against fire and other associated hazards – lightning strikes, hurricanes, floods and storms. However, some insurance companies charge you extra premiums to cover natural disasters such as earthquakes and famines. With add-on cover, you can also insure your property and other items inside it against terrorist activities. HPP, on the other hand, covers more risks.
The basic cover is divided into two parts. One covers the structure of the building against fire and associated hazards. While in the second part, all the above risks are insured for furniture, valuables and other household items. It is enough for people who live in a rented house to take out a policy for the things in the house. In addition to the basic cover, HPP also offers alternative cover against hazards such as theft, damage, mechanical or electrical breakdown. Other covers include public liability cover (compensation to be paid to a third party for damages caused by you), personal accident (regular income offer as long as you are unable to work due to temporary or permanent disability due to an accident) and work copy (home) Servants – You are protected if you are injured or killed by a maid and other workers.
How Do You Choose The Sum Insured?
The three components of the value of your home – land, building and area – are locality costs. Insurance only covers the building cost. E.g. The market value of your house is Rs.1 crore. The building cost is approximately Rs.30 lakhs. Your policy will cover only three million. A civil contractor or broker will be able to tell you the construction costs. Construction costs depend on the level of the city, but not the area. In Delhi, for example, a square foot of construction currently costs around Rs 1,800, according to a survey by a well-known company. Insuring your home helps in the event of incessant losses but what if a large number of houses are demolished like in Uttarakhand? If you have the land you can rebuild the building but if you have an apartment you cannot build the whole building alone. That is why housing societies and associations should insure the entire building, says the head of a well-known insurance company.
There are two ways to take a home interface. One, based on market value or depreciation cost and the other on reassessment basis. Do not confuse the market value of your home with the resale value. When you resell your home, you get the value of the land as well as the area where it is located. The market value in insurance is the value of the house after deducting depreciation costs. Suppose, when you sell your car, you get the value after calculating the depreciation cost. Insurance companies generally calculate an annual depreciation expense of two per cent of the market value, which can be up to 100 percent in fifty years. Reestatement, on the other hand, is the cost of rebuilding a building. In this case the insurance will not deduct the depreciation cost. Also take a reset cover for household items.
What Happens If You Have An Undersurance?
It is important to periodically review whether you have insured less than the required amount. “If the policyholder has under-insured himself, the company assumes that it is responsible for the remaining expenses. In this case, the insurance claim will be reduced equally.” This was stated by the head of the underwriting department of a well-known general insurance company. Suppose you have taken out insurance of Rs.5 lakhs. The cost of building your insurance house after five years is Rs 7.5 lakh. In this case you have paid only two-thirds of the premium at risk. So you get two-thirds of the claim. So insurance gives insurers a little discount. Fifteen per cent under insurance is waived.
How Much Does It Cost?
Insurance against fire and associated hazards of the house and its contents is not very expensive. E.g. Rs 30 lakh for building and Rs 5 lakh for content – fire and related hazards as well as Rs 2,000 for insurance against terrorism. The premium against cover for theft and robbery of Rs 5 lakh is Rs 3,155. The policy premium is Rs 5,600 for additional cover of Rs 4 lakh for damage or breakdown of domestic appliances and electronic equipment. If you own a home, you should take out home insurance immediately. If you are a tenant you should also take out insurance for home furnishings. Under construction property insurance should be taken out for building insurance if you are building your house but if the builder is building an apartment you can take out insurance for a house registered in your name only after the construction is completed.
What Happens At The Time Of Claim?
Adequate cover of your building is essential, but do not neglect the claim process. When you take out insurance for your home, the insurance company usually provides cover only after surveying the building and its contents. It insures based on what you have declared but will fully inspect the damaged goods at the time of claim. So you must have made the correct declaration and have the necessary evidence for that. An insurance company can deny a claim if it has been found to be in a low-level construction or in the maintenance of a building, or if it appears to have been illegally constructed. You also need to prove ownership of the house traps and show a bill showing the actual cost. Understand such a knot before taking out home insurance.