Climate around the world is changing for the worse. Rainfall patterns are turning erratic. Some regions experience devastating floods one year and crippling droughts the next. Intense storms during the cyclone seasons, and wildfires during the dry seasons are becoming prevalent. Many natural calamities bring loss of life and property. While the loss of life cannot be paid for, the loss of property can be alleviated with the help of insurance.
A comprehensive home insurance policy protects you against damage caused by natural disasters. So, as you deal with the loss of property, it would be much easier for you to bounce back from your financial losses, and rebuild your life with greater ease. Here, I’ll answer six basic questions asked about home insurance.
Question # 1. What are the inclusions?
A comprehensive home insurance plan with various added benefits can protect you against a long list of perils – both natural and man-made. Damage caused by natural calamities such as earthquakes, cyclones, landslide, volcanic activity, fire, floods are covered, and so are those caused by strikes, riots, malicious intent, missile testing, theft, burglary, etc., or anything else defined in the list of inclusions for any home insurance policy. Coverage may differ from one insurance provider to another. Some features may be provided as add-on coverage upon the payment of additional premium.
Question # 2. What are the exclusions?
Some damage is beyond the scope of home insurance coverage and claims towards such damage may be rejected. Some of these include damage caused by wilful destruction, consequential loss, wear and tear, war and nuclear war, loss of currency, negligent use leading to damage, enemy invasion, etc. Again, the extent of your coverage can be improved through add-ons. For example, damage from terrorism may be excluded from a base cover but included as an add-on upon the payment of additional premium.
Question # 3. Is only the structure covered?
Not necessarily. A comprehensive insurance policy will cover not just the structure of your home but the contents inside the structure. But you can also choose to insure either the structure or just your contents, depending on your requirement. Just remember that the greater the extent of your coverage, the higher the premium you will need to pay. If you own valuables – art, antique, jewellery, or anything whose loss could lead to substantial financial losses to you – you should consider including them in your coverage.
Question # 4: Can’t tenants buy home insurance?
Yes, they can. As a tenant, you could simply insure the contents of your home. Items such as valuable electronics, furniture, garments, and items of everyday use can also be covered. As a tenant, these items can be covered against inclusions such as accidental damage, fire, theft, burglary, electrical breakdown, natural calamities, and man-made hazards. If you are a homeowner, you can buy structural or comprehensive coverage for protection against damage that may be caused during the tenancy.
Question # 5: What is the claims process?
To initiate the insurance claims process, one must follow the rules laid down by the insurance provider. The damage must be reported within the stipulated timeline in the format asked by the insurance company. Normally, the company would provide you with an email address, a fax number or a helpline on which you can contact it to report your damage. To support your claims, you would need all relevant documents such as proof of damage, the fire brigade’s report, medical officer’s report for death or disability, police report, invoices, receipts, repair estimates, etc. The insurance company will assign a surveyor to assess your damage before finalising your claim payout.
Question # 6: How much coverage do you need?
Remember that a home insurance policy will cover the cost of the structure and not the cost of land. You can choose which of your home items – furniture, electronics, baggage etc. – you wish to cover under your policy. Upon this, you also have the option of availing a range of add-ons (such as personal accident cover, or third party liability cover for damage caused to a third party in your home). The higher your coverage, the greater your premium. For example, a building coverage for Rs 50 lakh and a contents cover of Rs 5 lakh will be covered by a well-known public sector insurance company for an annual premium of Rs 5200 plus GST.
A home insurance policy is a must for those who live in regions vulnerable to natural disasters. In the unfortunate event that a disaster struck your homestead, your insurance coverage will make it easier for you to absorb the financial damage and rebuild your life.
Adhil Shetty is CEO at BankBazaar.com.