Know About the Usefulness of Home Insurance Policy

Home Insurance

Purchasing your dream home is a big thing for everyone, since it involves a lot of investment and planning. Well, it just doesn’t stop there, additional money is needed for its decor, furnishing, appliances, etc. Now, in the event where any damages occur, you end up losing vast amounts of money. If the damages are due to an earthquake, flood, or any such natural calamity, you will incur substantial money losses that might seem unaffordable. Here comes the need for a home insurance policy online. Now kindly have a look to understand what home insurance in India is.

What is Home Insurance?

A household insurance plan, also known as a property insurance plan, is a policy that offers coverage against the damages suffered by your home and its contents. In the event where the damages are either human-made or natural, the insurance company will pay you for the incurred losses.

Features of a Home Insurance Online Policy

A home insurance online policy comes with the features cited below:

  • Different variants to suit the additional coverage requirements of homeowners.
  • Low & affordable policy premiums.
  • Usually, it is issued for a year after which you may choose to renew it.
  • Coverage amount relies on the insured assets & their value.

Home Insurance in India: Different Types of Plans

The best home insurance policy in India has the below-cited types:

1. Structure Household Insurance 

As the name suggests, this type of plan covers your house’s structure (the walls, floors, roofs against natural/human-made damages). It is also referred to as a Standard Fire and Special Perils policy as it covers the structure against the damages incurred due to fire & other human-made/natural calamities.

2. Contents Household Insurance

This plan only covers the house’s contents, such as jewellery, furniture, fixtures, home appliances, etc., against damages. This plan best suits people who suffer a peril of damage to their belongings.

3. Comprehensive Household Insurance

This type of plan covers both structure and contents of the house and offers protection against damages/losses due to human-made/natural conditions.

4. Public Liability Household Insurance

This plan covers any injury suffered by people when they are on your property or if your property causes damage to some other person’s property. In such events, the aggrieved third party might raise a financial liability, and the public liability policy covers this liability.

5. Tenant’s Household Insurance

This policy is devised for individuals living in rented homes. The policy is like a contents home insurance policy that covers a tenant’s belongings in a rented home.

What is covered under Household Insurance in India?

The best home insurance policy in India includes the losses/damages incurred due to the situations cited below:

  • Fire, landslides
  • Strikes, riots, terrorism, other malicious activities
  • Lightning, floods, storms, cyclones, earthquakes
  • Aircraft damage
  • Missile testing acts
  • Theft, burglary
  • Implosion, explosion

Additional Coverage Benefits under Household Insurance in India

Besides the benefits cited above, you can also opt for some add-ons under your personal property insurance plan. These additional benefits increase the policy’s scope of coverage and are available at an extra policy premium. The most common add-ons include the following:

  • Rent Loss: If, after damage, the house property is unoccupied, the landlord faces the loss of rent for the period the home is under repairs. This add-on covers the loss of rent.
  • Rent for an Alternate Property: The rent paid for an alternate property is covered in the event when your house is damaged, and you must live somewhere else.
  • Lock/Key Replacement: The cost of lock/key replacement is also covered.
  • Escalation cover: The increase in the home’s value due to inflation is also covered.
  • Terrorism cover: The terrorism-related losses are covered.

What points are excluded from Home Insurance?

Home insurance policy does not cover the following damages/losses:

  • Non-disclosure of crucial details in the proposal form
  • Pre-existing damages/defects
  • Damages due to mutiny, war, nuclear warfare
  • Pollution/contamination-related losses
  • Loss of cash, precious stones, jewellery, etc., unless specifically mentioned under the policy document.
  • Intentional or consequential losses
  • Wilful negligence
  • Land Cost
  • Usual wear & tear and depreciation
  • Damages incurred when the property is not occupied for more than a specified duration.
  • Under-construction properties

Benefits of Home Insurance

Home insurance plans are incredibly beneficial due to the following reasons:

  • Provide you with financial protection in the event when your property and its contents get damaged.
  • The compensation provided by the household insurance enables you to reconstruct your damaged property or replace the damaged contents without spending anything from your pocket.
  • Because of the low premiums, you can have your house insured under an optimal policy without worrying about its finances.

Now, give a read to the primary benefits of a home insurance plan described below:

1. Cover for Main Property

The principal objective of home insurance plans is to protect your primary property, that is your home’s part where you live. There can be events of complete loss due to a hurricane, tornado, or house fire. Here comes the need for a home insurance policy at 100% of its value, or at least 80-90%, that will protect your primary property against the events cited above.

2. Cover for Detached Structures

The second most crucial aspect of a home insurance plan is the cover for separate structures, such as sheds, the doghouse, garage, fences, etc. Usually, separate structures have a cover for up to 10% of your primary property’s cover. However, your best home insurance policy in India can be customised if you want extra coverage for your property’s separate structures.

3. Cover for Home’s Contents

In the event where a storm or an earthquake damages your property’s contents, you will be compensated wholly or in part (as per your policy’s conditions.) This is a notable benefit of having a home insurance plan that is often neglected by most homeowners.

4. Cover for Liability

Liability cover is another reason that you really can’t bear without a home insurance plan. It indeed costs a lot of money in healthcare treatments while someone has got injured in your property, and there are chances that you will be held responsible financially. Your primary health policy will not cover injuries of you or other residents or even the property damage. A household insurance plan is designed to protect you against expensive court cases that could happen due to several reasons (for instance, a visitor’s injury due to dog bite).

5. Cover for Loss of Use

In the event where you must move out of your property while it is being rebuilt/repaired, you will incur hefty expenses of food, travel, and hotel. Having a home insurance plan ensures that these expenses are covered and will be paid by your insurer by your policy’s loss of use element.

How is the sum insured for a Home Insurance Policy calculated?

The sum insured in a home insurance plan is calculated on different bases that are cited below:

  • Agreed Value

It is used to calculate the sum insured of a property. The sum insured is determined by multiplying the property’s total area with the value (per square feet). The property’s size would be the area, as mentioned in the property’s registry. The value (per square feet) is the value that is specified in the Ready Reckoner, which is issued by the State Government’s Revenue Department. The value would be evaluated for the date on which the insurance’s proposal is made.

  • Reinstatement Value

It is used to calculate the sum insured for protecting property under household insurance. The value is the property’s reconstruction cost to the original state in the event of any damages. During calculation, the land’s cost would be excluded. The reconstruction cost is calculated by multiplying the building’s area in square feet with the current construction cost in the area where the property is located.

  • Indemnity Value

It is also used to determine the sum insured for protecting the building under a home insurance plan. The value determination is as it is in the reinstatement value basis. However, the building’s depreciation, based on its age, would be subtracted from the sum insured when it is determined.

  • New Contents for Old Ones

It is used for protecting the house’s contents and for calculating their insured sum. Under this, the insured sum is the cost of substituting the home’s damaged contents with the new ones of the same amount.

  • Indemnity for House’s Contents

The depreciation of the contents adjusts their replacement cost due to ageing. Hence, the replacement cost of the damaged contents lessens to part in depreciation.

Popular Home Insurance Plans Available in India

Here are some insurance companies in India which offer household insurance coverage:

1. Bajaj Allianz Home Insurance

  • Plans:
  1. My Home Insurance Policy
  2. Householders Insurance Policy
  3. Easy Householders Insurance Policy
  • Options of continuous coverage for up to 5 years
  • Numerous add-on covers are available for making the coverage comprehensive

2. ICICI Home Insurance

  • Prudential Home Insurance
  • Up to 50% premium discounts for purchasing a comprehensive plan for five years
  • Cover for water seepage related damages

3. HDFC Ergo Home Insurance

  • Plans:
    1. Home Insurance for Tenants
    2. Home Insurance for Owners
    3. Housing Society Insurance
  • Different types of premium discounts
  • The company provides 24*7 support in case of claims

4. Reliance General Home Insurance

  • Plans:
    1. Home insurance – Structure Protection
    2. Home Insurance – Contents Protection
    3. Householders Package Policy
  • Multiple types of policies are available
  • Coverage for jewellery and precious items against theft
  • Chain snatching is also covered.

5. Oriental Insurance Home Insurance

  • Householder Insurance Policy
  • You can buy different policies for the building and contents.
  • The premiums are very low and affordable. 

6. Royal Sundaram Home Insurance

  • Plans:
    1. Home Building Insurance
    2. Household Articles Insurance
    3. Home Building and Household Articles Insurance
  • Up to 50% premium discount is allowed for a comprehensive policy
  • Mobile and jewellery can also be covered

7. IFFCO Tokio Home Insurance

  • Plans:
    1. All in One Home Protector Policy
    2. Home Suvidha Policy
    3. Home Family protector Policy
  • An extensive scope of coverage is offered
  • Range of add-ons is available under the plan

Usual Mistakes While Buying the Best Home Insurance Policy in India

1. Only Emphasising on Prices

Just like anything you purchase, it’s crucial to know what specifically you’ll get with your household insurance. Ensure that your “pocket-fitting” insurance is not cheap because required coverage is not covered.

2. Not Purchasing Insurance for the Right Ownership

Which kind of occupants live in your home directly defines the policy type you should buy. Household insurance differs for people who own & live in their home from those who own a house that they are paying rent for. In a few scenarios, your claim won’t be included if you have the wrong policy as per your home’s occupancy because each of these scenarios has some specific risks and prices associated with them.

3. Not Knowing the Exclusions

Your household insurance aims to protect you in case of a significant/semi-major disaster. However, it does not act as a warranty. Take enough time to know from a comprehensive level what is covered and what is not.

4. Assuming Coverage for Flood Insurance

Most people don’t know that household insurance does not offer coverage against floods. The flood insurance policy covers your home and its contents against storms and flooding during hurricanes, tropical storms, and torrential rains, and the same can be bought through the NFIP (National Flood Insurance Program). Kindly note that there is a waiting time of 30 days required before a flood policy will be effective.

5. Opting for “Actual Cash Value” Over “Replacement Cost” Coverage

When you face a loss, the actual cash value will only offer you reimbursement for an item’s “book value”. In most scenarios, an old table, couch, or a desktop worth nothing, and hence, you get nothing. However, if you choose “replacement cost,” you will be provided with the item’s new replacement without any deduction.

Related Blog: How can you save money while buying homeowner insurance?

6. Compromising on Coverage for Low Policy Premium

People often commit the mistake of choosing the policy of lower sum assured to minimise their policy premium. However, a much better strategy is to have bolder coverage and increase your deductibles. By doing this, you will still have a lower policy premium along with strong coverage.

7. Assuming your insurance will cover someone else’s property

Kindly note that if you rent out your property, and those who occupy it suffer a loss to it, your “landlord” insurance plan will not cover this loss. Your tenants are required to have their renter’s insurance plan to protect their property and any liabilities.

Who all should purchase the best Home Insurance Policy in India?

The best home insurance policy in India is available for individuals who either live in a rented house or their own. It is a wrong saying that only people who own a home should buy the best household insurance policy in India. Although the property belongs to your landlord, it has contents that are yours, which makes it crucial to go for the best home insurance policy. Regardless of whether you are an owner or a tenant, purchasing the best home insurance plans in India should be your top-most priority. Various insurance providers are there, which provide exciting discounts on home insurance online plans to those who have purchased 3+ household insurance online covers. However, do not let discounts make you buy those covers, which you do not need.

Choosing the Best Home Insurance Policy in India: Follow these Tips

If you are willing to get the best household insurance policy in India, below-cited are some tips to comprehend:

1. Select the plan that you require

Different types of household insurance policies are there, and while purchasing the best home insurance policy in India, you should first know what kind of coverage you need. A comprehensive home insurance plan is best if you own your home. However, if you are a tenant, it would be best to opt for household insurance for contents.

2. Compare Home Insurance before you Finalise

There are a plethora of general insurers that offer home insurance online. Hence, before purchasing one, it would be best if you compare household insurance of different providers on their features and premiums, and then choose the one that best suits your requirements.

3. Choosing essential add-ons

Every home insurance online policy offers extensive coverage. The existing cover can, however, be intensified through add-ons. Once you are aware of all the available add-ons, opt for the required ones to get all-inclusive household insurance.

4. Compare Home Insurance: Go through the CSR (claim settlement ratio) of different Insurers

You should always compare home insurance policies of different insurers based on their CSR (claim settlement ratios). It helps you identify the possibility of a total number of claim settlements. The higher the CSR, the higher would be the possibilities that your claims requests would be successful.

5. Find out Premium Discounts

You can get some premium discounts from some insurers that can help you in reducing your policy premiums. Hence, choose the best home insurance policy in India that offers maximum discounts so that you can reduce your premiums to the full potential.

How to Claim Household Insurance?

Follow the points cited below to make a claim request for your household insurance plan:

  1. For getting your claim registered and possibly approved, you should inform your insurer within 7-15 days of the loss.
  2. Raise an FIR at the closest police station.
  3. The insurer would assign a surveyor who will analyse the losses.
  4. Post the survey, estimation of claim amount would be done.
  5. You should, then, submit your required documents to your insurer.
  6. Your insurer would then verify your documents, and after approval, your household insurance claims would be settled.

Documents Required for a Claim Request

The below-cited documents are required to raise a household insurance claim:

  1. Duly signed & filled claim form
  2. FIR’s copy
  3. Investigation report of the damages by the police
  4. In the case of fire-related claim requests, a fire investigation report
  5. Original invoice of replacement contents
  6. Summons by the court
  7. Repair costs estimates
  8. Other required documents

Whether you live as a tenant or own a house, household insurance can provide you with financial protection against damages/losses that may occur. Having the best home insurance online policy ensures that you don’t suffer any financial losses if any unforeseen event damages your property and its contents. Therefore, it saves you a substantial amount of money at very low policy premiums.

FAQs

No! Every home insurance plan involves a deductible amount. The household insurance plans pay claim amounts that exceed the limit of deductibles. Kindly note that you are liable to pay the deductible amount.
Typically, a household insurance online policy is offered for one year. However, most insurers now provide coverage duration ranging from 24 hours to up to five years.
The best home insurance policy in India generally provides you with discounts on premium amounts for purchasing a comprehensive home insurance online plan and choosing a prolonged duration.
If you protect your house and its contents under a household insurance online policy for a lower amount than their actual value, it is known as underinsurance. In this event, all the claims are settled as per the average clause.
Indeed! You can buy a home insurance online policy for a house that you have rented out as a residence.
An FIR is mandatory in case your house has got damaged due to strikes, riots, terrorist acts, burglary, etc. However, for the situations cited below, filing an FIR is not necessary:
1. Earthquake
2. Flood
3. Lighting
4. Storm
5. Impact Damages (due to accidents)
To make a claim on a partially damaged house, follow the below-mentioned steps:
1. Inform your insurer about the incident.
2. You will be requested for a duly filled & signed claim form and a rough repairing estimate.
3. It is advised not to undertake any repairing up till now, otherwise there are chances your insurance company might reject your claim.
4. Once your insurer receives the claim form and other documents, it appoints a surveyor who will visit your house to evaluate the damage level.
5. The surveyor will then submit the evaluation report to your insurer who will approve/reject your claim request.
6. You can now undertake repairing, and post its completion, the surveyor will re-visit your house and submit the details about repair and expenses to your insurer.
7. After receiving all the original payment receipts & bills, the net amount to be paid by your insurer will be calculated based on the surveyor’s evaluation reports and deductibles.
8. If your claim request is approved, your insurer will either initiate the bank transfer or send a cheque at your residence. However, if your claim is rejected, your insurer will send a letter of claim rejection at your postal address.
In the event when your home gets damaged, the damaged part will occupy some space. With this, you would be compelled to go for debris removal for home reconstruction. Most insurers reimburse the expenses that you make on debris removal, along with a few deductions.