Recently, the monsoon has increasingly been associated with floods and property damage. Heavy rains this year have caused significant property damage in Bengaluru and Delhi, highlighting the essential need for home insurance.
Home insurance provides three primary types of coverage: Structure, content, and comprehensive. Structure coverage safeguards the physical components of a house—walls, roof, foundation, and fixed installations. Content coverage protects movable household items like furniture, appliances, electronics, and clothing from theft, damage, or loss caused by covered risks.
Comprehensive coverage integrates both structure and content protection into a unified policy, ensuring comprehensive coverage for both the dwelling and its belongings.
"Individuals should select structure coverage if they own their property but might consider skipping content coverage if they are renting. Comprehensive coverage is well-suited for homeowners residing in their homes who seek extensive protection. Renters should choose content coverage," advised Tarun Mathur, co-founder and chief business officer at Policybazaar.
"The sum insured for home loans and insurance should adequately cover the cost of rebuilding the house if it suffers total damage. According to T A Ramalingam, chief technical officer at Bajaj Allianz General Insurance, a fair estimate of the sum insured can be obtained by multiplying the carpet area by the cost of construction."
Home insurance provides coverage for the expenses related to construction, excluding the value of the land. Kapil Mehta, co-founder of SecureNow, advises calculating the construction cost per square foot, multiplying it by the total square footage, and adding an additional 10-15% to the insured amount. It is recommended to have more coverage than less to avoid being underinsured.
Insurers usually ask for a list of household items, along with their year of manufacture and model. Mathur advises, "Make a list of all your possessions and calculate their total worth. Make sure your insurance policy covers at least this amount to replace all items in the event of a complete loss."
Mehta recommends that valuable antiques, paintings, jewelry, gold, or watches be specifically declared to ensure their coverage. A comprehensive cover of Rs. 50 lakh would usually range between Rs. 9,200 and Rs.11,500.
All home insurance policies cover flood damage, but homeowners should verify that their insurance includes STFI protection to safeguard against monsoon rains. It is also recommended to explore supplementary riders, such as personal accident cover, especially for those residing in flood-prone areas.
Mathur highlighted that, high-rise resident’s benefit from two insurance coverages: a master policy for structural components and common areas, and individual content coverage for personal belongings, improvements, personal liability, and living expenses if their unit is uninhabitable.
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