General Insurance: Gaurav Garg

I own a farmhouse in Lonavala. I have a caretaker who looks after the house. We only have basic furniture and utensils there, and no valuables. Should I still go for a householders’ policy? Does it cover the cost of house repairs and maintenance?
A home insurance product has two components — building cover and content cover. An unoccupied premise for over 60 days is not insured under home insurance. Since there is a full-time caretaker living in your farmhouse, it can be covered.

The building can be covered against fire and allied perils such as an earthquake, terrorism, etc. It is important to keep in mind the frequent occurrence of earthquakes and flash floods.

 

The second part is the content cover, which provides insurance against any damage to items due to fire, allied perils, burglary and theft. Audio-visual appliances such as television, and domestic appliances such as washing machines and refrigerator, can be covered against breakdown.

Home insurance cover goes beyond the regular theft cover for valuables. But it does not provide cover for its regular repair and maintenance.

How do insurers value a car from the second year? Does it have an impact on premiums?
It is calculated by applying a depreciation percentage on the manufacturer’s listed selling price for the vehicle. It is in the range of 20 per cent for a one-year old car to 50 per cent for cars that are four years and up to five years old. For obsolete cars and vehicles beyond five years old, the value is decided on an understanding between the insurer and insured.

The premium depends on a number of factors, which differ from one company to another. These rates are applied on the value of the vehicle, and hence, if the rate remains the same in subsequent years, the premium may come down.

Financial planners say buying life insurance at an early age helps, as premiums are lower. Should one follow the same principle for health insurance?
Life insurance policies are long-term policies. Premiums, therefore, are lower if one starts it at an early age. Health insurance policies are annual plans, and the premium keeps varying, according to the age of the insured. The premium for a health policy is also lower if you start early, but can increase with age. However, it is important to have a health policy at an early age, as it will help in getting a higher sum insured and continuity benefits that may become difficult later.

What is a no-claim bonus? Does it make sense to make small expenses from one’s own pocket and get the bonus?
Motor policies have a provision for a no-claim bonus. The policyholder needs to evaluate the amount of claim vis-a-vis the likely loss of no-claim bonus on renewal for taking a decision to claim or not to claim. Apart from losing the no-claim bonus, it might have an impact on the renewal premium as well.

I plan to buy a car next month. Which policy is more important — own damage or third party? Are additional covers (or riders) provided with car insurance?
The preferred cover is a package policy that covers both own damage and third-party claims. Depending on your need, you can also choose add-on covers (riders). The additional covers provided are a personal accident cover for the owner, provided he/she has an effective driving licence, a personal accident cover for an unnamed passenger and legal liability to the paid driver.

The writer is the managing director & CEO, Tata AIG General Insurance. Send your queries to yourmoney@bsmail.in