A standard home insurance brochure tells you that the policy will protect the structure of your house and its contents from perils such as fire, flood and earthquake. In case of loss due to risks listed in the document, the insurer will pay on the basis of the house's reconstruction cost. The reinstatement value is calculated on the basis of the built-up area and the construction cost, generally fixed by the company.
The terms are therefore straight if the house is on your own land. You just have to estimate the cost of rebuilding ' which should be the sum insured' and the insurance company will pay accordingly in case of loss.
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However, if you own an apartment, which is equally exposed to the dangers of getting partially damaged or completely razed by a natural or man-made calamity, the policy document may raise some queries in your mind.
Since the policy covers the reconstruction cost, how is the sum insured calculated for a single flat in a building? Can you buy insurance for such a property at an individual level or do you have to approach the insurer along with other flat owners? How will the insurer compensate, since there will be more than one claimant in case of damage to the building? We try to answer these questions and suggest things to be kept in mind while picking a plan for your precious abode.
Usually, housing societies get the structure of the building insured. This means you have to insure only the contents of the house such as jewellery, electronics and furniture. If the society hasn't insured the building, you can buy a cover individually as well.
The insurance plan for an apartment has the same underwriting principles and sets of inclusions and exclusions as a policy for an independent house, irrespective of the floor on which the flat is. There are no additional features either.
"The insurance is done considering the built-up area and the cost of reconstruction," says Neelesh Garg, executive director, ICICI Lombard General Insurance. If you feel the society's insurance is inadequate, buy an individual policy as a top-up cover.
"The society not having any insurance or having inadequate cover will in no way prejudice the claims of an individual flat owner," says Balaji Cuddapah, senior vice president, commercial lines and risk engineering, Bharti AXA General Insurance.
When Under Construction...
You cannot buy a cover for an individual apartment in the course of its construction since it is part of the entire building structure. While a building is under construction, it should ideally be covered under a project insurance policy taken by the builder.
This would be in place until the construction is completed as per the approved plan. After the completion of the project, either individual flat owners or all of them together, as a society, can buy the insurance cover.
In case it is a private bungalow or an independent house which the customer himself or a builder is constructing, then the owner can take a cover for the same and change it to a regular home insurance cover after the completion of construction.
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