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Home is the most valuable possession you own. You have worked hard, collected money and built your dream apartment. You know the risks to your house and have decided to avail a Householder’s package policy. This policy protects the structure of your house, as well as the contents of your house. Duty to your house done? Think Again. Ask these questions before you avail home insurance.
In the case of your apartment, the home insurance plan calculates the premium, by multiplying the carpet area (area within the walls of your apartment), with the cost of construction in the city your apartment is located. Whether you reside on the 5th floor or the 1st floor, does not matter. The cost of construction remains the same. Your apartment might be in a housing society. The housing society avails a common home insurance cover for all the apartments in the building. This is a basic fire and allied perils home insurance. The basic home insurance availed by your housing society, does not cover the contents of your house. You need to avail a separate home content insurance, to cover for the loss/damages to the contents of your home.
The apartment is yours and you can avail home insurance for protection against damage to the structure of the apartment. You can also avail home content insurance, for the contents of the apartment which belong to you. Your friends can avail separate home content insurance for their contents. However the Insurer can deny you coverage for the contents of your apartment, if it is difficult to segregate your contents from your friend’s contents.
Partial insurance for the contents of your apartment is underinsurance. You are covered for the contents of your apartment, only up to the cost which you have insured for. If your furniture costs INR 2 Lakhs and you have insured the furniture for only INR 1 Lakh, then the insurer pays only INR 1 Lakh, even if the entire furniture set is destroyed. If you under insure the contents of your home, you are saving on home insurance premium. However this means you have to bear, part of the risk of damage/destruction of the contents of the apartment yourself.
You have availed a householder’s package policy. The contents of your apartment are robbed/destroyed when your apartment is not occupied. Will the insurer compensate you for the loss? Most Insurers will not compensate you for the loss or damage to the contents of your apartment, if it is unoccupied for 7 days.
If you sell the apartment, you will have to inform the Insurer and get the home insurance policy cancelled. The apartment no longer belongs to you. You no longer have an insurable interest in the apartment. You can sure advice the new owner, to avail a home insurance plan for the apartment. This article attempts to explain the finer points in home insurance which are often neglected.