What is included in Home Insurance Coverage?

Homeowners should consider home insurance as a crucial policy choice, offering extensive protection against damage and theft risks. Awareness of home insurance remains relatively low among homeowners, making this guide essential for those seeking to understand how it operates.

What types of risks does Home Insurance Cover?

Home insurance encompasses a diverse range of risks, which can be broadly classified into two categories: damage or loss to the structure and damage or loss to the contents. These risks can then be further categorized as:

  • Loss or damage to the structure occurs due to:
  • Flood
  • Earthquake
  • Missile Testing
  • Aircraft Damage
  • Storm, Lightning, Cyclone, Hurricane, Tornado
  • Explosion/Implosion
  • Strikes, Riots
  • Leakage from sprinklers, bursting and overflowing of water tanks
  • Loss or Damage to the contents because of:
  • Burglary
  • Terrorism

A home insurance policy typically excludes certain scenarios:

  • Loss or damage resulting from the insured’s domestic help, whether directly or indirectly implicated in burglary or theft, is typically not covered by home insurance.
  • Willful destruction
  • Losses incurred due to the house being unoccupied for a specified period, such as 30 or 60 days, are typically excluded from home insurance coverage.
  • Cash, bullion, and works of art are typically not covered by home insurance policies.
  • Electrical and mechanical breakdowns are usually excluded from home insurance coverage.

Before purchasing a home insurance policy, it’s important to consider the list of exclusions specific to each policy.

What is the appropriate amount for insuring my Home?

Home insurance determines the insured value of the house using the concept of “Reinstatement Value,” which represents the cost of rebuilding the house to its current specifications. Market rates are not factored into this calculation. This aspect of home insurance operation may prompt questions, but it’s essential to note that the cost of construction also accounts for the property’s location.

Some insurance companies also assess the cost of the house on an agreed value basis, calculated by multiplying the total area of the house specified in the registered sale agreement by the value per square foot according to the Government’s Ready Reckoner.

Another method for determining the value of the house is known as the Indemnity Basis. With this approach, the cost determined according to the Reinstatement Value is reduced by the depreciation on the property. It’s important to note that this method of calculation does not favor the homeowner, so it’s advisable to select a policy that does not utilize this method.

The insured value for the cost of contents is determined by the replacement value of the insured items. It is the responsibility of the insured individual to compile a comprehensive list of items requiring insurance coverage. However, coverage for jewelry varies among insurance companies and their respective policies.

How can I make a claim for Home Insurance?

This constitutes a crucial aspect of the insurance policy. Most insurers establish a specific procedure for initiating a claim. Upon experiencing any property damage, the insured individual should promptly notify the insurance company. A surveyor will be dispatched to assess the damage onsite. Following the surveyor’s submission of a site report, the insured must provide the insurance company with supporting documents for the claim. Subsequently, the insurance company will review the documents, and the claim will be either approved or rejected accordingly.