Home Insurance Basics

A house is just not an address where one resides, but a dream home. Today, a number of insurance companies in the market provide insurance to protect your interests and belongings. We are here to provide you complete information and guidance, to help you choose the right kind of insurance policy. We are here with some information that will give you a synopsis of the basics of Home Insurance.

The three most important situations that make a householder qualified to insure their house are: 

•    Private homes occupied by individuals
•  Flats taken on lease/rent or Accommodations
•   Landlords or Owner of private residential condominiums used for housing  purposes.

The fundamentals of home insurance declare that any residential flat or accommodation

which are by the way being used as office or studio or for that matter, any commercial purpose can apply for insurance coverage on condition that the premises is used mainly for residential purpose and used for business purpose incidentally. The amount of coverage that can be claimed depends on the cost to reinstate your home in the event of any loss or damage.

Premiums are estimated based on the following factors:

•    Age of the residence/premises
•    Location
•   The total asset value of the premises.
•   Fire protection
•   Optional coverage

The following are the basic types of insurance policies:

Special Homeowners policy which covers the structure and all threats of loss except

those kept out in the policy.

For proprietors of co-operatives or condominiums, the coverage may include personal property coverage and coverage prone to the owner's unit for additions and modifications.

A Dwelling Fire Policy covering personal property against fire, wind, explosion, smoke, flood and other hazards. Additional optional coverage may also be available. Homeowners’ insurance policies may vary in coverage depending on their home and personal belongings in the event of a covered loss.

Importance of Home Insurance

A home is a place of admiration, everyone adores it. It is an abode where we find tranquility. Many Insurance Companies offer exclusive policies,  that can cover various features against natural and man-made disasters. We acquire our assets compromising on various other things just to fulfill our desire of having a dream home. It may cost us a fortune to re-establish our home in case of any occurrence of damage to our property. Hence, we need to understand the significance of home insurance and avail the godsend opportunity to insure our home.

While we may not be able to predict any sort of disaster or harm caused to our home, it would be our utmost responsibility to be prepared in advance and be able to tackle any fateful incidents and catastrophes. Many insurance companies offer insurance not only to the property, but also to someone who gets injured in the premises of the home at the time of disaster. Some of the home insurance policies cover a home under any kind of risks. This means that the policy, as long is integral will cover home and complete assets contained within under any circumstances which are otherwise not considered in an elimination cause.

Home insurance covers a home for any damage caused by fire, earth quake, any natural or accidental damage, or any act of sabotage under all risks policy. However, if the policy states that the home is not covered for any other damage mentioned above, like the one due to a flood, then it cannot be claimed. Hence, it is our supreme responsibility to shield our home and defend ourselves when the calamity strikes without a warning

Types of Home Insurance 

Insurance has become a vital entity in today’s life. We need insurance for everything, for ourselves, our family and for our property. We need a life insurance policy to support our family members who can claim that from an insurance company in case of our demise. It is very essential to have a med-claim or a health insurance policy to take care of our medical needs in case if we or our family members get admitted in a hospital. Similarly, we need a home insurance policy to protect our home under home insurance coverage to protect it from any damage and compensate the losses. Home insurance is an important wing of general insurance, and we can find various companies that pledge to reimburse for any kind of damage to the residential property or life. Home insurance has become inevitable for people these days and this is clearly seen as the companies offering home insurance are gaining huge margins serving their clients and offering services.

Building insurance and asset insurance are the two most important categories of home insurance that cover damage to both house and the gear inside the house. The only thing that is not covered under insurance would be the fabric inside the home.

Damages that are covered by both types of home insurance are given below:

1. Coverage under Fire and other hazards.

A comprehensive package that covers the damages to the structure of home due to any of the following:

Fire

Storm, hurricane, flood & deluge (outpouring)

Mutiny, strike & spiteful damage

Lightning or thunder strike

Explosion & Implosion

Aircraft damage

Damage due to collision by vehicles

Subsidence, landslides and rockslides

Bursting and/or overflowing of water tanks, apparatus and pipes

Missile testing operation

Leakage from automatic Sprinkler installations

Bush fire/ Forest fire.

2. Cover due to Earthquake or Seismic activity: Covers damages caused due to earthquake.

3. Terrorism Cover: Covers damages due to acts of terrorism.Any home insurance does not compensate as per the market values. The valuation is done on the basis of land cost and the cost of the construction in the premises. The insurance cover is only for the cost of the construction, since land cannot be insured.The amount is calculated by multiplying the area and the cost of construction per sq.ft.

4. Insurance Coverage for Contents Inside the Home:

This cover is only for damages or loss of asset inside the home -electronic and electrical goods, furniture and fixtures, clothing, jewelry and any other stuff inside the home.

The coverage is valid for contents under the following circumstances:

The Fire and Specials Perils Cover

Earthquake Cover

Burglary / theft or any break-in attempt

Loss of jewelry, gold ornaments, silver articles and precious stones kept under lock & key (security). 

Fire Insurance policy

Fire insurance policy is a commercial policy covering building, equipments, offices, contents and other material. It is administered by the All India Fire Tariff with effect from 31.03.2001, which governs the terms of coverage, the premium rates and the conditions of the Fire Policy.

The fire insurance policy covers any loss or damage to any commercial property. The fire must be a consequence of an actual explosion and the outcome loss must be adjacently caused by such explosion. The policy also covers any loss or damage caused in any attempt to extinguish the fire.

The amount that can be claimed under insurance depends on the loss suffered and if the property comes under insurance, only a fair amount is compensated.

For instance, if the construction valued Rs. 15 lacs is insured for Rs. 9 lacs, then the amount refunded in the event of fire will be only 60% of the loss.

Fire insurance policy covers:

• Commodities ruined or property harmed by water used to stub out the fire.
• Loss/damage caused by demolition of adjacent structures/buildings by the contingent to prevent the flames from advancing.
• Breakage of goods in the effort of their removal from the premises where fire is severe.

Payments made to people employed to put out the fire.

Types of losses which not covered

• Fire insurance policy does not compensate to the losses incurred by fire which is the outcome of earthquake, invasion, act of foreign enemy, hostilities or war, civil strife, riots, mutiny, martial law, military rising or rebellion or insurrection.
• Losses due to cavernous fire, smoldering of property by order of civic authority, robbery during or after the incident of fire, impulsive combustion e.g. detonation of a bomb.  

Categories of Insurance Policy

Specific Policy

A ‘standard article’ is applicable to such a policy and it does not consider the tangible value of the property in settling on the amount of insurance. The insured has to put up with a part of the loss himself. This is to verify the under-insurance of property.

Comprehensive (all-including) Policy 

It is an intact policy and envelops risks that include fire, theft, burglary, third party risks etc. Sometimes, it may also compensate loss of profits because of interruption of business due to fire.

Supplementary Policies

Other types of policies are Valued Policy, Floating Policy and Replacement or Re-instatementPolicy.

Insurance Policy for Home Appliance in India

There is a minimum warranty period for most of the appliances. However, the pledge covers only manufacturing flaws and does not afford losses due to electrical or mechanical collapse such as overloading, excessive pressure or voltage fluctuations.

A persons’ house and property are guarded from damage and threat even by the traditional householders’ policies

Even the traditional householders’ policies account for the insurance of house and property from damage and threat but do not offer to protect them from the expenses of paying for costly repair and replacement of household machines.

Home appliances insurance is unambiguously designed to squirrel away the person from an unanticipated loss or repair of any expensive household machinery/equipment in case of breakdown.

The cost involved in the repair of these items can be overwhelming. Hence it is advised to go for a home appliances insurance policy which can compensate for items ranging from kitchen appliances that includes items like dishwashers, refrigerators, electronic gadgets, computers and also diverse items like vacuum cleaners, washing machines, lawn movers etc.

Important points to be remembered when going for a Home appliances insurance policy

The description of the insurance policy is to be taken into account, apart from the cost of the insurance.

Proper information is to be gathered from the insurance provider about the procedures to be followed in case of any equipment failure.

Some policies offer the liberty to select a contractor to service the equipment, while many also offer selected contractors and assign them the responsibility of repairing the item.

Some policies compensate for the equipment by allowing the insured to select a replacement depending on the item, cost etc, while others may offer a swap of the item only from a particular list of items.

Some policies cover for the item, provided a set of safeguard measures have been applied to the item during its maintenance. Hence we need to inquire about the required maintenance schedule to keep the guiding principles up-to-date and active.

Rules and Regulations:

A home appliances policy can be included to be a part of the general householder’s package policy. The amount of compensation depends on the sum insured and the market value of the item at the time of damage. Complete information is to be provided to classify the item including the details of Serial No., Frame No., Batch No., Make & Model of the equipment etc.

Insurance Policy for Home Robbery in India

This policy covers for the loss or damage of any property due to theft, burglary or break-in of a home. This policy is not only applicable to property, but also to personal possessions. This is also applicable, when the loss of item is not just due to theft/ break-in by force or aggression, but also in circumstances with no evidence of them.

Items covered under Home Burglary Insurance:

The lost of any item is compensated only if the burglar/theft happens during the policy period. The policy, apart from covering for loss of items, also reimburses for the damage caused to premises. The company takes into account, the amount insured and the market value of the items at that time, whichever is lower to recompense for the loss.

Items NOT covered under Home Theft Insurance:

The policy does not include livestock/farm animals, automobiles, pedal cycles, money, stamps, deeds, bonds, bills of exchange, currency, promissory notes, certificates, official documentation, business books, manuscripts etc.

Requirements:

A complete list of items needs to be prepared, that covers the details and description of all the items if the home burglary policy is not included in the house holders’ package policy.

Before the policy is offered, the insurance company carries out a thorough inspection of the items through its agents and only then proceeds with the documentation and rest of the formalities.

Cost involved in Burglary Insurance Policy:

The payments can be made in monthly installments like for other policies. The premium amount varies, depending on the value of the items being insured on annual basis. The insurance company should be notified within 2 weeks in writing with complete details of the items lost with proof in order to authenticate an insurance claim.

Home Insurance Claims

Home Owners Insurance Policy is to cover the losses in the event of any harm done to your property.

Most people claim for damages caused to their premises and items, which are due to man-made disasters and natural calamities. Home Insurance also covers for loss or damage caused to personal belongings as well. An Incident Manager can be appointed to claim for the loss of any damage caused due to flood or fire.

Home Insurance Claim Services:

We need to ensure the following services are provided by the Insurance Provider before availing their service:

Their services are available round the clock. (In the event of a major catastrophe like fire/flood/ earthquake etc).

They provide an automatic replacement of the items through their network of agents/ suppliers who work to process the coverage, without having to cater out time and efforts, which can be in turn be availed to get back to normalcy.

There is a network of surveyors to come out and perform the valuation of the property and items before coming to terms.

Steps to claim Home Insurance:

To notify the insurance provider immediately after any damage caused to the property/items in order to claim them.

To provide the complete paperwork with documentation of the extent of damage also taking picture or video of the premises/items to assess the degree of damage.

We can also undertake temporary repair activities to avoid further damage cause to the item/property.

Make a list of the items that are lost or damaged completely to avail the replacement cost coverage. It is utmost important to have the complete list of items.