Natural calamities are a common phenomenon in our country. Therefore, the risk of residential property damages due to floods, cyclones, storms and earthquakes is generally high, and repairing these damages can cost a lot of money.
Additionally, Rakesh Jain, CEO of Reliance General Insurance, says, “home is a financially and emotionally valuable asset. Any damage to it could cause mental and financial distress.”
Hence, keeping certain aspects in mind, home insurance is not only the most convenient way of safeguarding your home but also the most economical one.
Understanding the different types of Home Insurance policies
Home insurance financially protects your residential building and household contents therein from any loss or damage due to fire, riots and natural calamities like cyclones, storms and earthquakes anywhere in the country. Jain points out, “Homeowners can avail of this policy for house structure and contents both, whereas tenants can avail it to insure only contents.”
There are two types of home insurance policy – a basic policy and a package policy.
- A basic policy which is known as a Bharat Griha Raksha Policy (BGR in short), protects your residence from any loss or damage against fire, riots and natural calamities like cyclones, storms and earthquakes, which may affect your property. This policy can also cover the loss of your home furniture, fixtures, electronic items, and kitchenware due to these events. Note that “even theft of insured contents is covered under the BGR home insurance policy if it happens within seven days as a result of an insured event like fire, riots or natural calamities,” adds Jain.
- A package policy, on the other hand, offers the policyholder additional coverage along with the features of a basic policy. In addition to fire, Jain explains, “these plans cover riots and natural calamities. A package policy will be beneficial if one wants to ensure protection against burglary, housebreaking and breakdown of electrical equipment, as these are not included in a basic policy.”
For instance, if protecting your valuable jewellery from theft whilst at home or even on your person while travelling anywhere in the country is on your mind, or you want to cover the breakdown of electronics like a refrigerator, LED TV, or laptop, then package policy will get you covered. It also covers accompanied baggage during travels.
Deciding factors for coverage
Whether you take a loan for purchasing a house or not, experts advise taking home insurance nonetheless to protect this valuable asset. The extent of your cover usually depends on the type of home you insure. For instance, insuring a bungalow, if compared with an apartment in a multi-storied building, would require coverage for additional structures like compound walls, garages, parking spaces, out-houses etc. While these additional structures are covered by default in bungalows, according to experts, you need to appraise the insurer about them during the insurance purchase.
Jain points out, “Age of the building is another deciding factor for home insurance coverage. While insurers widely cover newly constructed buildings, old and poorly maintained buildings are less preferred for insurance due to high risk.”
He further adds, “While newly constructed buildings are generally in good conditions and follow safety guidelines, old buildings often lack safety features and regular maintenance and are in poor health.” Therefore, the insurance coverage depends on the age and conditions of the building.
Difference in premiums
Premiums for a basic policy, package policy and individual covers vary. However, Jain says, “it is critical to note that basic home insurance is quite affordable, and the premium costs around Rs 2 to 3 per day for an annual insurance value of Rs 10 lakhs.”
While a package policy costs a bit more than the basic policy, it offers protection to a wide range of items and against several natural and man-made events. Moreover, in both cases, if you take the policy for the long-term, the premium per annum will be even cheaper as you will be eligible for a discount.
Jain further explains, “In our mind, home is a safe and comforting place. However, with rising uncertainties, protecting our homes with an insurance policy is the most responsible and wisest thing to do. It ensures protection against major financial setbacks in case of an unforeseen event. But it also safeguards our fond memories.”
