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How best to protect your home

Last updated on: July 10, 2007 09:08 IST

"While you are holidaying, thieves are working," says a billboard advising you to keep things safe in your house by buying home security devices. But before such technology became available, we have always had the option of insuring our interiors as well under the householder's insurance policy, offered by general insurance companies.

This policy covers ten different kinds of situations. You have the option of choosing a comprehensive policy (inclusive of all ten sections) or purchase separate covers.

Like all other general insurance policies, the householder's policy also has to be renewed every year. Of course, the insurance companies throw carrots at you like a 15 per cent discount on premium, if you buy five to six sections. Also, you can get 20 per cent discount if you purchase more than seven sections.

The ten sections include:

Basic Policy, better known as fire coverage has two sub-sections - one covers just the building. The other covers the contents in the building against damage from fire and allied perils.

Cover for loss or damage due to burglary, excluding jewellery, gold and silver articles, securities, cash and televisions, which are covered under other sections.

Cover for 'all risks' against loss or damage to jewellery and valuables.

Cover for damage or loss to fragile items like glassware including plates and glasses.

Cover for accidental breakdown of electrical, electronic and mechanical gadgets like refrigerators, air-conditioners, microwave ovens, washing machines etc.

Cover for loss or damage to television sets, video systems and computers against all types of risks like fires and allied perils, theft and accidental breakdown.

Cover for loss or damage to a bicycle.

Cover for loss of or damage to baggage while you are travelling in India.

Cover for personal accident.

Cover for legal liability to a third party for personal injury or property damage.

However, there are some things you should know while insuring your home. First, give the correct value of the insured product. Surely, you may need to pay a higher premium if you state more, but the actual value is needed for adequate coverage.

In the case of appliances, the sum insured should cover the replacement value of the appliance. That is, the value of an appliance falls dramatically after the first few years. So in case of breakdown, you won't be eligible for full settlement unless your insurance covers the replacement value.

Also, if any of the insured items is being replaced, you need to inform the insurance company so that the policy papers can be revised. Inform the company if there is any change in your address, or the company can ignore your claim completely. You must also inform them if you are leaving the house for more than four years.

Normally, the premium for loss or damage to the house because of fire and natural calamities ranges from Rs 60-65 per lakh of coverage. If you want an additional cover for terrorist attacks, the premium will be Rs 95 per lakh. The premium for insuring your home against theft varies from Rs 25-30 per lakh, which will cover your property and valuables against burglary and house breaking. The premium can be paid annually.

Of course, like all insurance policies, these policies also come with the whole list of exclusions, which include:

  • Damage due to war, invasion, act of foreign enemy, hostilities, civil war, rebellion, revolution etc.
  • Damage due to confiscation or destruction by order of any government or lawfully constituted authority.

When the claim is a large one, the insurance company will send a surveyor to check the damage. Remember that whenever there are any claims, you should inform your insurance company immediately. Follow up your telephonic complaint with a written letter to avoid any future hassles. In case of a fire, the fire brigade report is a must before filing a claim.

If the cause of damage has been a flood or an earthquake, you may have to prove that the natural calamity did occur. In case of a theft, a first information report from the police is mandatory.

You will have to prove that the burglary did not occur because of any carelessness on your part. For jewellery, you have to provide details like weight and design and cash memos for goods like television. Of course, there is a lot of fine print in the system as usual.

For instance, if your servant or housekeeper breaks into the house, there isn't a case of housebreaking or forcible entry into the house. So the insurance company may deny you the payment. But barring these exceptions, the householder's policy is a good way to keep your house safe.

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Sajag Sanghavi