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Your home is a costly and prized possession. A once in a lifetime purchase. Have you given much thought as to how much it would cost to replace your dream home in case of a natural calamity?
This article explains what is home insurance and why it is necessary for you to have a home insurance policy.
If your home catches fire and is destroyed it might not be possible to replace. Have you given much thought to this?
This policy replaces the structure of your home if destroyed by:
You will have to pay an additional premium to cover damage due to an earthquake, landslide or a terrorist attack.
A much better home insurance policy for you is a householder’s package policy. You have to pay a higher premium than a fire and allied perils policy. You are covered for damages suffered to the structure of your home by fire and allied perils.
You are also provided a cover for the contents of your home (Furniture ,electronic items, jewelry, art) destroyed by a fire and allied perils , theft or burglary and mechanical and electrical breakdowns.
Compensation to a third party affected by the damage your house causes (part of your neighbor’s wall is destroyed when your house collapses) or compensation for the injury/death of your domestic help is also provided by a householder’s package policy.
A home insurance policy replaces the structure of your home (walls, floor, ceiling and so on) damaged in a calamity. The market value of your house is of no consequence.
If your home costs INR 50 Lakhs (Market value) and the cost of the structure is INR 20 Lakhs you are insured only for INR 20 Lakhs. You can avail home insurance on the market value basis (The value of the structure of your house is calculated after deducting depreciation of around 2% per year).
If the structure of your home costs INR 10 Lakhs, after 5 years it is worth only 9 Lakhs. 10 Lakhs - (2% of 10 Lakhs * 5 years) = 9 Lakhs
You can take a home insurance policy on reinstatement basis where the amount you spend on reconstructing your damaged home is given to you after construction. You will have to pay a higher premium than the home insurance market value basis.
Take a home insurance policy under the reinstatement basis in spite of the higher premiums, as you are given the whole amount you spend on reconstruction/replacement of the structure of your home.
HOUSEHOLDERS PACKAGE POLICY
|Premium Payable per year||Sum assured (Structure + Contents)||Burglary/Theft (Up to INR 5 Lakhs )||Jewellery Cover (Up to INR 5 Lakhs)||Terrorism Cover||Damage to electrical and electronic equipment (Up to INR 5 Lakhs)|
|INR 2000-3000||INR 15,00,000||No||No||No||No|
|INR 3000-4000||INR 25,00,000||Yes||Yes||No||No|
|INR 5000-INR 6000||INR 30,00,000||Yes||No||Yes||Yes|
When you purchase the home insurance policy you make the declaration of your goods and valuables in good faith. (Insurer doesn’t verify the value/number of goods and valuables).
When you make a claim the Insurer thoroughly checks/inspects goods and valuables for damage. You need to make the right declaration with sufficient proof.
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