Home Truths. The nitty-gritty of home insurance claims

There are many eventualities, about 12-15, that are generally covered by most policies. For instance, flood, which has been widespread this year in many parts of the country, is one occurrence that is covered.

Other natural calamities including earthquake, lightning and landslide can also be covered. Also, accidents such as fire may be something you may be able to file claims for, if your policy covers it.

Theft is another risk that is covered. Other human-made risks such as riots, strikes and terrorism can also be covered. In fact, there are policies that cover somewhat rare events such as damage from aircraft, too.

The policies are typically not very expensive and may be available for ₹1,500-2,000 per annum for a cover of about ₹10 lakh. As the cover is for unforeseen events, it may be good to cover for more situations as the extra premium may not be high.

A home insurance policy can be a complicated document, and it is not straightforward to find what items are covered, for what amount and what are the exclusion conditions.

It is likely that when taking the policy, you chose to cover only the house and nothing else. In that case, damage to not just furniture, but even woodwork done in the house will not be eligible for a claim.

You need to understand the coverage amount for each of the category of items in the house and add the ones you want to include.

A standard fire policy may typically not cover your individual appliances. In general, the items covered must be listed out along with the value of the items. It is advisable to ensure that the value is what you will pay to buy the item anew, rather than the appliance’s resale value. The coverage can be bought as an add-on to the fire policy as part of a home insurance plan.

Note that to claim fire damage, you must provide a report from the Fire Department when submitting your claim. Also, if the fire was due to your negligence, you may not get compensation.

When you take insurance, each of the jewellery items are valued and you can fix a maximum amount of cover for each. Say, the cost was ₹1 lakh when you took insurance. You can cover for this or for a higher amount of, say, ₹2 lakh If you had taken the higher cover and the price of gold has doubled, you will get the maximum claim amount and will be able to buy equal amount of gold.

But the catch is the following. If prices had increased by only 50 per cent, you will only get ₹1.5 lakh, enough to buy the amount of gold you lost, and no more.

The idea of insurance is to get you back to where you were before the loss, not to make profit. The claim you will get is therefore the lower of the insured amount or the replacement value.

No. This comes under liability cover and is separate from home insurance. For injuries to a visitor while in the premise, you need to take a public liability cover. The cost is typically ₹40 per annum to cover ₹1 lakh of public liability.

Yes, for at least two reasons. One, the claim will be denied if the insured house has not been occupied for an extended period, typically, more than a month.

If you plan to be away, inform the insurance company to avoid claim denial. Two, if you do not file a police complaint and do not have an FIR, the claim may not be entertained.

You cannot insure what you do not own as there is no ‘insurable interest’, in insurance parlance. You must ask your tenant to take a tenant’s insurance policy to cover the items in the house. Your home insurance will cover damage to the house.

The writer is an independent financial consultant