Answers to Some Not-So-Common Questions on Home Insurance Policies

home insurance policy

How a home insurance policy can secure your ‘abode’, i.e, home, this is what this article is all about.

Indeed, your home is one of your precious assets that give you comfort and peace after a long tiring day. However, in the recent times, there has been an increase in the frequency of natural calamities, such as earthquake, and flood. Life comes to an abrupt halt whenever a natural calamity strikes and the destruction it brings with it leaves unbearable financial and emotional pain.

There is nothing more important than a good, safe, secure home: Rosalynn Carter

While it is not feasible to alleviate emotional loss, we can reduce the hardships with home insurance policies. These policies offer complete protection to your against both natural and man-made calamity. Further, to get the maximum coverage, it is pertinent to have a complete understanding of the policy. For that, you shouldn’t think twice before asking questions that may even seem stupid because only then you will be able to get more clarity. To help you make a right decision, here is a list of not-so-frequently asked questions on home insurance. It will give you an in-depth understanding of the policy.

  1. Should I consider the floor of my house while buying home insurance?

No, it is not required to consider the floor of the house. Home insurance policies cover do not include the land cost as the payout will be made only with respect to the construction cost of the house, which would be computed by multiplying the carpet area of the floor with the prevailing construction rate in the area. For instance, if your carpet area is 500 square feet and the construction rate is Rs 200/square feet, the sum insured for your home structure would be Rs 1,00,000. Here, the floor of the building is not considered by the insurer for computing your construction cost.

  1. If I am living with my friends; should I buy a home insurance policy?

If you own the house, you can buy a home insurance policy to cover both structure and content. Also, your friends can buy the cover for the part of their content. However, insurance companies have rights to reject your policy application if it gets challenging to segregate your content with that of your friends.

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  1. If there is a water leakage through a common tank, will contents be insured?

As per market experts, usually water leakage due to cracks is not covered as it can be taken care by maintenance. However, home insurance policy covers structure and content against bursting and overflowing of water tanks.

  1. What happens to the policy in case the house is sold?

In case the house is sold, it becomes essential to inform the insurer to cancel the policy as the insured has no longer an insurable interest in the house. A new owner should buy a new policy for the house.

  1. What happens if I am underinsured?

You will need to do a periodic review of your policy to ensure that you are not under-insured. In case of under-insurance, the insurer assumes that the policyholder has agreed to self-insure for the remaining loss. For instance, you can buy a cover of Rs 30 lakhs for work of arts worth Rs 50 lakhs. In case of a claim, the insurer will pay only Rs 30 lakhs even if the entire work gets damaged and the remaining loss will be borne by you.

  1. Does my policy cover expenses of rent for alternate accommodation?

Some insurers cover additional expenses incurred for the payment of rent in case you have to live at an alternate accommodation due to the loss covered by perils covered under the policy.

  1. If the basement of my house is damaged by heavy rain, will it be covered?

Your home insurance policy will cover losses to the basement if the same has been declared at the time of filling the proposal form. Also, the sum insured should also be computed after factoring in the cost of a basement.

  1. Does my location affect premium rates?

Often unnoticed, but the location of your house can affect your premium rates. For instance, if your residence is close to a police station or fire station, premium rates will be low. Similarly, the age of the building has its direct bearing on the premium. So it is always good to ask this thing in detail.

  1. How am I supposed to inform the insurer after the disaster?

The insured needs to inform the claim to the local office of the insurance company or the company’s call centre. The insurer sends the surveyor, and the claim is settled once the insurable interest is identified. Also, the insured needs to submit KYC documents to process the claim. In case of any natural calamity, the insurer asks for only minimum documentation to expedite the claim settlement procedure.

Your home insurance policy is an essential addition to your insurance portfolio. But how well you choose the policy and use it could make the real difference.

 

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