by THO
Recent earthquakes in Delhi and Kolkata caused strong tremors, while cities like Mumbai, Bengaluru, and Chennai have faced severe flooding over the years, resulting in extensive property damage. Natural disasters are unpredictable, but home insurance can provide financial protection against such losses.
“Home insurance is a comprehensive policy that covers fire and allied perils, including floods and earthquakes, for both home structures and contents,” says Amrish Dubey, SVP, Personal Lines, TATA AIG General Insurance.
Construction-related damages covered
Man-made damages are also covered. In Bengaluru, many residents have alleged that construction work for the metro rail has caused cracks on walls of adjacent buildings. Home insurance can cover damages in this case too.
“If a customer’s property is legally compliant and documents are in order, damage to the home’s structure from nearby metro construction will be covered under a comprehensive home insurance policy. The policyholder’s policy should specifically include coverage for construction-related risks,” says Ashwini Dubey, Business Head, Home Insurance at policybazaar.com.
For the claim to be valid, the insurance policy must be in effect before any damage occurs, as most policies do not cover damage retroactively. “Therefore, the homeowner must have an active policy prior to the onset of construction, with no pre-existing damage at the time the coverage was purchased,” he adds.
How home insurance claims are settled
Claim is paid depending on the type of product opted, there are insurance products which offer claim settlement on reinstatement basis which means that the insurer will reimburse you for the actual cost of repairs or rebuilding, rather than simply paying out the total sum insured. Claims can also be settled on an agreed value basis up to a given sum assured.
“Please note that the reinstatement option is available for both i.e., flats as well as individual houses whereas the agreed value option is available only for flats. Important point to note is that the agreed value basis claim settlement is being done as per the sum insured opted but the reinstatement option offers the claim settlement for reinstating the building structure,” says Dubey from Tata AIG.
How individual coverage is different from coverage taken by the housing society
When you are living in an apartment in a housing society, it is important to remember the following.
“According to RWA (Resident Welfare Association) law, it’s compulsory for RWAs to obtain structural insurance for the building and common assets within the housing society. This legal requirement ensures that the entire building and its shared amenities are protected,” says Vivek Chaturvedi, CMO and Head of Direct Sales, Go Digit General Insurance.
Also Read: Delhi earthquake: How NCR residents can check if high-rise buildings are safe from tremors
This collective insurance approach offers comprehensive coverage for common areas and structural elements, unlike individual policies that primarily focus on personal units and their contents.
When an apartment is insured separately, the building structure, claims will be based on the carpet area declared during the purchase. If the building is rebuilt, the insurer will cover the apartment’s share of the structure.
“If the building is not rebuilt, the insurer will provide a claim based on the reinstatement value, covering the declared sum insured, carpet area, or cost of construction for the individual unit,” says Dubey from policybazaar.com.
Home insurance covers contents inside an apartment
To cover the contents inside your house, you will need to obtain a separate ‘contents cover’ insurance policy. Contents cover safeguards items like furniture, appliances, electronics, and clothing against damage or theft from covered perils.
Standard policies often include coverage for valuables like jewellery and artwork up to specified limits. However, for these high-value items, it’s recommended to opt for a ‘Cover for Valuable Contents on Agreed Value Basis.’
Also Read: Fire safety in high-rise buildings: 12 things residents should know
“This allows you to declare and insure these items at an agreed-upon value, providing more comprehensive protection. Therefore, while basic contents are covered, valuables require separate declaration or a specialized add-on for adequate protection,” says Chaturvedi.
What should you do in case of an eventuality
In case of a claim, the insured needs to notify the insurance company as soon as possible, a duly filled claim form along with required documents should be submitted with the insurance company. Details of the required documents are mentioned in the policy wordings. If needed, the insurance company can be contacted for any support required.
Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics
