Home insurance policy types and the cover they offer against natural and man-made disasters

When it comes to home insurance, there are various policies available in the market. We examine the differences between them, to help owners to gauge the right policy

Damage to properties due to natural disasters, is one of the gravest financial setbacks that one may come across in life. The floods in Kerala in 2018, caused damage worth several thousand crores to property and made a large number of people homeless. “While humans cannot avert natural calamities, one can certainly protect their homes against them and minimise the loss or damage. Insurance is the first cover, on most people’s list. However, very few people take home insurance in India. Even though it is affordable, less than one per cent of people end up buying it,” says Amit Wadhwani, managing director, Sai Estate Consultant Chembur Private Limited.

Buying a comprehensive home insurance policy will ensure that a home buyer can be safeguarded against financial losses, if any event occurs. The policy can cover all types of natural and man-made disasters, including floods, earthquake, terrorist attacks and even robbery. Puneet Sahni, head-product development, SBI General Insurance, explains that “A comprehensive home insurance policy provides cover for the structure, as well as the contents of a home, against unforeseen circumstances, including natural disasters and hence, is recommended for home buyers, to ensure that they are not faced with a financial crunch.”


Types of cover that home insurance policies provide

  • Home insurance for the structure: This policy provides home buyers with protection for the structure of a home, which consists of the structure itself, along with permanent fixtures and built-in items.
  • Home insurance for contents: This policy provides home buyers with cover for the contents of their home, including furniture, jewellery, electrical and portable appliances.

(Inputs from Puneet Sahni, head-product development, SBI General Insurance)

See also: How to choose a home insurance policy for your house


Besides the basic protection, an insurance policy can also offer add-on covers, such as the cost of living in a rented accommodation while your house is being repaired. If the house is rented out, the owner can take cover against the loss of rent, if a natural calamity renders it unfit for occupation. However, these covers are for a limited period of up to a few months after the disaster.

A landlord insurance covers the financial risk to a property, caused due to earthquake, flood, fire, damages due to a tenant’s actions and so on. When the landlord incurs such financial loss due to damage to the insured property, then, the insurer pays for the replacement cost, to the extent of damage, after adjusting the deductible as per its terms and conditions. For example, if, due to fire, the kitchen is damaged, then, the insurance company will pay for the cost incurred in repairing the kitchen. However, before you get the claim amount, the insurance company may ask you to pay the deductible sum.


Which insurance policy should you buy?

A landlord may be more concerned about the structure of the property. Hence, he may like to buy insurance that covers the risk of damage to the structure. On the other hand, a tenant may be more concerned about the belongings and so, may like to buy insurance for the contents. A comprehensive home insurance policy product, may give you the benefit of risk cover for the contents, as well as the structure. However, before buying an insurance policy, the applicant should check out the list of inclusions and exclusions, to figure out what risk hazards the insurance product covers.


Insurance for under-construction properties

While a home insurance policy provides risk cover only for the constructed property, what if you have bought an under-construction property? In this case, experts suggest that it is the duty of the builder, to get a project insurance policy, to cover the threat to an under-construction property from natural disasters. So, before you buy an under-construction property on a home loan, check whether the builder has taken a project insurance cover.


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