General insurance companies offer home insurance policies usually for covering your home in case of natural calamities such as earthquakes, floods, fire and landslides. Aside from these, there are several sections in the policy which broadly cover for the house’s structure alone or your possessions such as fixtures and furniture, appliances and jewellery or both. Some policies also cover up rental expenses in case you need to move elsewhere when your house has been damaged because of some of the calamities covered by the insurer.
Calculating the sum to be assured
For home insurance, it is very important to consider the value of one’s possessions and property. For instance, you should not insure your home at market value or the purchasing price which prevailed ages ago. The cost of construction materials go up every year. Instead, you should seek to get the furniture, fixture and fittings and building insured on reinstatement basis because in case of a loss both must be replaced at the present replacement or construction cost. Therefore, in case of any mishap you will be capable of replacing your loss completely without having to bear depreciation. Insurance consultants claim that most people incorrectly insure their houses, factories or offices even at book (the price paid for the property) or market value. When insured by book value, you under insure your property which results in claims which are paid by the underinsurance average while if you insure according to market value, then you become over insured.
One of the simplest ways of insuring your structure is on the basis of per square foot. For instance, if the cost of replacement for a new house is Rs 1000 per square foot then for 2000 sq. ft. you will have to buy insurance of Rs 20 lakhs. The land cost must not be taken into consideration of the sum insured. For including the cost of land, a valuation must be conducted by a professional for justifying the sum insured. The sum insured shall be adequate as replacement cost on the loss date.
Insurance of Household Goods
It is better to steer clear from insuring household goods at their book or purchase price as when adjusted for depreciation, you will get back very little as claim. Also, knowing the replacement cost for it is not easy. Therefore, you will have to use some form of an approximation and also have a list of contents separately in some place safe (apart from your home) so that in case of a big loss, you will know what items were there at home. You should get the reinstatement value clause written in your policy so that the claimed amount paid is enough to refurbish and rebuild your home.
The premium payable belongs to a vast range based on the factor variety related to geographical location,construction type, home’s size and jewellery among other valuable assets in your house. For instance, if your home is valued at Rs 60 lakhs and your possessions such as appliances, jewellery and furniture cost an added sum of Rs 12 lakhs, then the amount payable as premium would be Rs 5000.
Process of Claim
You must inform the insurance agent or firm in case you need to claim money. Put forth a written claims document to your insurance company within a stipulated period. The written claim should bear a complete account of your articles damaged or lost along with the actual value of the article. The claim request shall then be forwarded claims department of the company. The insuring company appoint the surveyor who shall submit the FSR or final survey report alongside the documents that you have submitted. Upon receipts of these documents, the department of claims process the claim. Upon approval of the appeal, the letter shall be sent to the insured party that states the amount payable as settlement along with the voucher of discharge.