Sometimes it takes just 40 seconds to turn life upside down! That’s what it took for the earthquake that had its epicentre in Nepal to wreak havoc in the country.

While life insurance plans serve the purpose of replacing one’s income and help dependents, events such as earthquakes destroy not only one’s dwelling but also make one lose one’s valuable belongings.

One should be ready to face such financial hardships. Helping here are general insurance companies, which offer householder insurance policies providing coverage against earthquakes, in addition to protecting the building and the contents within one’s home.

Which cover to go for? You can opt either for a standalone fire insurance policy (FIP) or a more inclusive householder package policy (HHP). FIP only protects the building of your house against fire and allied perils like earthquakes, lightning, storms, floods and riots.

A householder package policy covers the contents of the house against burglary and mechanical or electronic breakdown, besides covering the building and contents against fire and other perils.

While deciding on the sum assured or the coverage for your home, only the cost of reconstruction (excluding the land value) is taken into account.

For example, if the market value of your home is ₹1 crore and the construction cost is ₹35 lakh, then only ₹35 lakh would be the value considered.

Similarly, contents within the home should be insured for their market value.

However, a few policies do not provide coverage for earthquakes and treat them as exclusions. Many add them to the coverage on payment of additional premium.

But most plans cover these calamities — fire, lightning, explosions, earthquakes, landslides, storms, cyclones, hurricanes, floods, riots and strikes.

Then there are some optional covers. For instance, some plans offer a terrorism cover, which covers damages and losses to the structure and/or contents of your home due to acts of terrorism.

There is also a cover for additional expenses of rent for alternative accommodation, if you are forced to move because your home is destroyed or damaged by an insured peril. The policy will cover you against the additional rent.

There are 10 different sections in an HHP, so add only the important ones. Covering your home against fire risk and contents is essential. For those in high-risk zones, insuring against events such as earthquakes or floods is a must.

The writer is MD, Bajaj Capital

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