You have built your home and have filled it with the desired possessions. Here’s how to insure them all without spending a fortune.

Home Insurance

How much would you be willing to pay for the assurance that if something happens to your most valuable asset—the value of which could run into lakhs of rupees—your loss would be compensated? Well, Delhi-based Sanjay Saxena spends about Rs 4 a day for insuring his doublestoreyed house against damage by fire, earthquake, lightning, storm or even by a riotous mob. The home insurance policy, which insures the structure of the house for Rs 18 lakh, costs Saxena an annual premium of close to Rs 1,500.

Of course, the building is not the only thing Saxena has got insured. Even the contents of the house—appliances, gadgets, furniture, furnishings, clothes and valuables worth almost Rs 5 lakh—are insured against burglary. But for that he has to pay an additional premium of about Rs 1,200 every year.

But as Gurgaon-based O.P. Jetley will tell you, it is money well spent. When his wife and he returned home after a 10-day holiday last year, they were shocked to discover that their house had been broken into and their jewellery worth over Rs 1.5 lakh gone. “My sense of security was shaken. The material loss was tremendous,” he recalls. However, thanks to the householder’s insurance policy he had taken for his home and belongings, the loss was made good by the insurance company. After the police submitted an untraceable report, Jetley’s insurance claim was settled. Though the jewellery, which held a lot of emotional value as well, never came back, Jetley was able to get almost the full value of the stolen goods. All this for as little as Rs 3,000 a year.

Jetley’s experience underlines the importance of insuring your valuables against unforeseen events. Says Kamesh Goyal, chief executive of Bajaj Allianz General Insurance: “Such a policy is a necessity for every household, but few are aware of its existence, leave alone its importance."

A householder’s insurance policy covers just about everything in your house. The policy stretches to cover nearly 10 categories of risks, including third-party liability and loss of baggage during travel. Almost all general insurers offer such policies with minor tweaking of the structure and sections.

The base policy in the package comes with two sub-sections: one covers the building and the other its contents. Before buying this policy, it’s important to understand everything it covers (see What’s on the House) and figuring out the relevant risks. Says Praveen Vashishta, CEO and managing director, Howden Insurance Brokers: “Product customisation is already happening with householder’s insurance where sections are clubbed for convenience.”

The best way is to mix and match the sections to get the most of the possibilities this insurance plan offers. For instance Section 2 covers loss of or damage to the contents of your house when it is burgled. This along with the fire and allied perils is a cover that one must have (see Must Have Covers).

With growing new home buyers, especially with borrowed money insuring the house structure can be valuable. Imagine a situation when your house structure is damaged while still repaying the loan—it is a double whammy that you would not want to face. However, it is better to insure the structure at cost and not the market value. The land and location of your house determines its market value, but its cost of construction may be a fraction of this. It’s a waste paying a higher premium when the cover is structural damage.

Ask Ram Prasad Aggarwal. Last Diwali, in a freak accident a firecracker flew into his house and started a mini fire in the bedroom. “We managed to douse the fire in time but a curtain was burnt and the walls were covered with soot,” he reminisces. The total cost of repainting the room and another curtain was around Rs 20,000. He was able to claim Rs 12,000 as damages. “The annual premium of Rs 1,400 was definitely worth every rupee,” he says.

Jewellery is perhaps safest in bank lockers, but if you do keep some at home, buy cover under Section 3, which provides “all risks” cover against loss or damage to jewellery, valuables and cash. What’s more, the cover even applies to jewellery that’s in bank lockers. The loss of jewellery is not always due to housebreaking. It can happen anywhere—in your office, when you are on vacation, even when you are going for a walk.

Section 5 provides cover against accidental breakdown of electrical, electronic and mechanical gadgets. These include refrigerators, air-conditioners, microwave ovens or washing machines, but not televisions (this is covered exclusively under Section 6). But watch out for the devil in the details. It’s important to give elaborate details of the items insured. “You need to specify the entire inventory details—model number, manufacturer, year of purchase, value and any peculiar specifications a gadget may have,” explains Goyal. Though, such detailing can be time consuming, it helps at the time of making a claim and leads to smoother settlements. If the appliance can be repaired, the insurance company pays for the repair costs. However, make sure you are insuring appliances at replacement cost and not depreciated costs (see Tips for You).

"Very few people are aware of the existence of a householder policy, leave alone its importance" KAMESH GOYAL, CEO, BAJAJ ALLIANZ

Section 6 covers your television, laptop and even cellular phone against all types of risks - be it fire and allied perils, theft, accidental breakdown. Even if you accidentally drop the idiot box while moving it from one room to another, you will get the claim if it was insured. Then there are sections that cover for plate glass, public liability, baggage and even bicycles. To make the package more comprehensive, insurers even tuck in personal accident cover.

Before you buy householders’ insurance, assess the risks that your house is exposed to and choose only those sections that match your needs. With some prudent selection you can lower the cost of insurance without compromising on the risk cover. These are sections you can ignore without taking on greater risk.

For instance, the cover against baggage loss is applicable only for domestic travel. Not everybody needs this cover. Likewise, you can strike out the bicycle cover—you may not have one.

The personal accident cover is a good safety measure. But why club it with a householder insurance plan when you can buy it as a stand-alone policy. And considering the high premium for insuring plate glass— Rs 10 for a cover of Rs 1,000 compared to 65 paise per Rs 1,000 for the house structure—you may be better off without insuring it. But adding sections can lower the premium. Typically, insurance companies offer a discount of approximately 15% if you take more than four covers. Take another two, and the discount goes up to 20%.

Buying householder’s insurance isn’t a one-time exercise: revise your cover with every gadget you acquire. So, get the paperwork in order if you don’t want to run around in circles while trying to get compensation for your loss.