Home Insurance (8)
Home Insurance plans provide you with an insurance cover for both the structure of your house and its contents against fire and allied perils on account of:
• Natural calamities – such as fire, lightning, earthquake, landslide, rockslide, flood, inundation, storm, tempest, typhoon, hurricane, tornado, or cyclone
• Man-made calamities – such as domestic gas explosions, overflow and bursting of water tank or pipes, damage caused by aircrafts, riots, strikes, malicious or terrorist acts
Additionally, the contents of your house can also be insured against burglary and theft and in some cases mechanical failure or breakdown.
A few other risks can be covered as part of your home insurance depending on the availability of such features in the product you purchase and at an extra cost or premium. These risks could include:
• Terrorism cover
• Debris removal cost
• Costs incurred to comply with building regulations following damage
• Professional fees towards architects, surveyors, etc. for superintending a building during rebuilding
• Cost related to movement of contents of your home to a temporary residence
• Loss of rent (for landlord)
• Personal Accident Cover
If you are the owner of your house, you could purchase a home insurance policy to cover both the structure of the building as well as its contents. On the other hand, if you do not own the house you live in, you could still insure the contents and your belongings against risks of fire and allied peril, theft and mechanical breakdown as applicable and available.
Although there can be various inclusions depending on the kind of policy you go for but common exclusions include:
• Deliberate destruction of property
• Loss or damage caused by war, wear and tear, atmospheric conditions etc.
• Losses if home has been unoccupied for more than 30 days (but few insurer do provide cover)
• Loss of cash, bullion, painting, works of art, and antiques
• Loss to the structure and/or contents of home due to acts of terrorism. (can be covered as an add-on)
If the new owner of the house wants to continue the householders’ insurance cover, the insurance company issues an endorsement in the insured’s name and passes the policy on to the name of the new owner. Else, you can cancel the insurance and can get a refund. The refund amount is mostly calculated as per the Short Premium Rates, applicable to policies with terms shorter than a year.
No, a home insurance premium doesn’t enjoy tax benefits under the current income tax regulations. However, proceeds from a policy claim are exempted from tax. However, the lack of any tax incentives for buying home insurance should not be a deterrent as the advantages associated with a home insurance plan far exceed any tax related benefits.
The process of filing a claim is not very difficult if you follow these simple steps-
• In case of burglary, inform the police immediately along with a list of items stolen and their approximate value.
• Inform the insurance company about the occurrence as soon as possible.
• Once you inform the insurance company, a surveyor will be sent to your house for an on-site inspection. Your cooperation would only make this process easy and less time consuming. Provide the necessary documents to substantiate your losses.
• You now need to submit a claim form at the insurance company.
The surveyor submits a report to the company after it is processed and approved; you receive your claim amount.