Buy comprehensive home insurance, with add-ons, for all-round protection

A standard policy is simpler and makes premium comparison across insurers easier

The pictures of destruction caused by the earthquake in Turkey and Syria have shaken many. Frank Hoogerbeets, a Dutch researcher who predicted the series of massive earthquakes, says the India-Pakistan-Afghanistan region is also susceptible to such tremors.

While natural calamities and the damage they cause are not under one’s control, one can pay a small premium and hedge the risk arising from such events.

“Home insurance is not as popular as other forms of insurance. But it makes sense to safeguard your home, one of your most important assets, with adequate insurance cover, especially if you live in a place prone to natural calamities,” says Tarun Mathur, co-founder & chief business officer-general insurance, Policybazaar.com.

What is covered?

A home insurance policy pays for losses caused by a variety of risks.

“Most home insurance policies include coverage for fire, explosion, storm, flood, earthquake, impact caused by external objects such as falling trees, and theft,” says Rakesh Goyal, director, Probus Insurance Brokers. Terrorism is another risk that is covered.

Our homes are not bare shells. They contain many fixed and movable assets, such as smartphones, laptops, and other high-end smart devices. Most people also have some jewellery and other valuables at home. All these can be declared separately and insured by the home insurance policy.

Who can buy it?

An owner who lives in his own house, a tenant who has taken the house on rent, and even an owner who has given the house on rent can purchase this insurance. “While homeowners can purchase insurance to cover the structure and contents, tenants can only purchase coverage for their personal belongings. Home insurance for tenants can include liability and content coverage. While liability coverage protects tenants in the event that they cause damage to the building, content coverage covers the cost of replacing lost or damaged possessions,” says Goyal.

Lender’s nudge

When you take a home loan, the lender insists that you purchase a home insurance policy so that the house is protected against fire, flood and allied perils. The policy is assigned to the lender. In case the house gets destroyed before the home loan is repaid fully, the insurer reimburses the lender.

While buying a home insurance cover is a good practice, it is not sufficient. The borrower should also buy sufficient term cover. In case the borrower passes away before the home loan is repaid, the family can use the payout from the term cover to repay the lender.

The standard option

Bharat Griha Raksha Policy, the standard home insurance policy, is one option that can be availed. The policy provides coverage against natural calamities, including fire, flood, earthquake and allied perils. House contents up to Rs 5 lakh too can be insured. “A standard home insurance policy simplifies coverage, making it easy to understand. Standardisation also pushes insurers to offer competitive premiums. Given the low cost of such policies, it's a good way to transfer risk to insurance companies, especially for those who live in hilly areas, flood zones, or seismic hazard zones,” says Aftab Chaz, associate director and business head at Elephant.in, Alliance Insurance Brokers.

Mathur, however, points out that Bharat Griha Raksha policy doesn’t cover electrical breakdown, short-circuiting, and damage or destruction of glass fixtures, sanitary fitting, precious stones and manuscripts.

Should you go for add-ons?

Home insurance today comes with several add-ons. Public liability insurance or third-party insurance is one such add-on cover. Chaz suggests buying a comprehensive home insurance policy, where the basic policy is combined with several add-ons to provide holistic protection.

“Protection for portable electronic equipment such as cameras, audio-visual, diagnostic and medical equipment, jewellery and valuables, loss of rent, extra protection against theft and burglary, and alternate accommodation are some of the add-on covers one can go for,” says Chaz.

While home insurance may not offer tax benefits, it is a cover that one must buy to ensure peace of mind.