Page 50 - Insurance Times February 2016
P. 50
Why insuring your home is a
sensible policy
B usy renovating your home? Why don’t you get the structure of your house. If there is any damage to the
papers ready for home insurance too? You love building — due to fire, flood, earthquake or any other peril
your home — from the designer furniture in the — you will be paid the sum insured.
living room, to the art work on your bedroom
wall and your son’s expensive electronics, don’t you? Structures can be insured at ‘re-instatement cost’ or at in-
demnity value. In re-instatement value-based cover, the prop-
But it takes just a spark from an electric short-circuit to dam- erty will be covered for the cost of re-building the house —
age these prized possessions irreparably. Sabh shubh hoga, the built-up area multiplied by the cost of construction per
don’t worry. But it is not a bad idea to spend a few thousand square foot.
rupees to buy an insurance cover for the home that is dear to
you. Home insurance policies cover both the structure and In indemnity value-based cover, the insurer will also take into
contents, but you can also get either of the two covered. account the age of the building. The property will be valued
at re-construction cost less depreciation. It is always better
People are aware about home insurance, but not many con- to go with re-instatement covers, though they come for a
sider it essential. They learn its importance only the hard tad higher premium.
way. Here are some real life examples.
If you own an apartment, you could consider Bajaj Allianz
Money to re-build the house General Insurance’s policy as it offers the option to cover the
apartment on ‘agreed value’ basis. Here, the sum insured
The harrowing experience that Sonal Birla and her family will also take into account the value of the land, agreed at
underwent a year ago made them rue not taking home in- the time of signing the policy.
surance. Sonal had stepped out of the home to visit the post
office, when her neighbour called to tell her that fumes were This can be of help when there is total loss, where you want
seen coming out of her window. But by the time she rushed to abandon the property and move to a nearby location and
back, and men from the fire station came, it was all over. buy a new apartment. Some insurers, such as Bajaj Allianz,
“From clothes to jewels and other valuables — everything ICICI Lombard and Tata AIG, also pay the rent for alternate
was burnt. The fire started with a short-circuit in the air- accommodation after a disaster.
conditioner,” says Sonal.
There are other add-on features, such as public liability cover,
The family moved to a rented apartment in the same build- pet insurance cover and employee’s (for a maid who might
ing after the accident. It took two months for them to renew get injured) compensation cover with some insurers, for an
the apartment. extra cost.
If the Birlas had taken home insurance, the insurer could Asif, a resident of Rajbagh in Srinagar, bought a home insur-
have paid for the loss. But weren’t they aware of home insur- ance policy three years after moving into his newly built house;
ance? “We knew that there was an option to get the home that too very reluctantly.
insured against disasters, but we didn’t think we would need
it some day,” laments Sonal. For a Rs. 50-lakh cover for the structure and Rs. 10 lakh cover
for contents on indemnity basis (items valued at replacement
If you stay in your own house, you can buy insurance to cover cost less depreciation), he paid a premium of Rs. 9,000.
50 The Insurance Times, February 2016
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