Protection for the Structure of Your House:
A home insurance policy provides financial protection in case your house is damaged due to natural or man-made calamities like floods, earthquakes, fires or vandalism. The floods in Uttarakhand and Chennai, for instance, caused mass destruction, leaving those who did not have home insurance having to bear huge losses.
A Basic Policy Covers the Cost of the Structure of the House.
This Cover is provided in 3 Ways:
- Reinstatement Value:
This is when the home insurance policyholder is given a value that equals the construction cost of the house, where the value of the land on which the house is based, is excluded.
- Agreed Value:
This includes the land value and the cost of construction of the house.
- Indemnity Value:
This is the market value of the house and it covers the construction cost and the depreciated value as per the age of the building.
Content Cover for Personal Belongings:
Given the increasing rate of crime in the country, acquiring a home insurance policy for covering personal valuables and belongings is a must. Advanced home insurance packages also safeguard the contents of your home like furniture, art work, jewellery or electronics. You can insure your contents by either buying a cover that accounts for depreciation, or on the basis of reinstatement.
Under valuation, the content cover has to be declared to the insurer through invoices and bills. In a reinstatement cover, you would get the cash for the insured items, without any allowance for depreciation or the wear and tear.
However, the reinstatement type of insurance is likely to cost more and would have several terms and conditions attached. Reliance General, for example, provides replacement for specific types of electronic items that are up to 10 years old (mobile phones, tablets and laptops are not included) where an old item is replaced with a new one of the same model on the basis of its current market price.
Wrapping It Up!
Home insurance policy is an important precautionary measure that you should definitely invest in. Ensure that you are not under insured, by declaring the value of assets in an accurate manner so as to derive the right sum insured figure.
Understand the terms and conditions and ensure that you check the policy every three to five years as the cost of reconstructing a house is bound to appreciate, due to a constant increase in inflation.