As extreme weather events like floods, cyclones, and heavy rainfall become more frequent, protecting your home against these unforeseen disasters is increasingly essential. In 2024, India recorded 5.4 million internal displacements, the highest in over a decade, driven largely by natural disasters.
These disasters, including flash floods, landslides, and cyclones, often leave behind massive destruction of properties, especially in major cities. It is in these situations that having a comprehensive home insurance policy can serve as a vital safety net, helping you recover losses and rebuild what was lost.
Home insurance provides coverage for a wide array of potential damages caused by natural disasters and accidents. It typically covers the physical loss or damage to both the building and its contents due to events like storms, cyclones, typhoons, floods, lightning, earthquakes, and even forest fires. In addition, insurance policies protect against damage caused by external factors such as vehicles, falling trees, or aircraft colliding with the home.
If a disaster leads to theft, home insurance will also cover losses that occur within seven days of the event. Furthermore, policies offer protection against malicious acts, including damage caused by riots, strikes, or terrorism. Even less common events like missile testing operations or the bursting of water tanks or pipes can be covered under a standard home insurance policy.
One important consideration is the coverage for both the building structure and the contents inside the home. The building coverage compensates for any damage to the structure itself, while the contents coverage pays for the loss or damage to personal belongings like furniture, electronics, and appliances.
While home insurance provides extensive coverage, there are certain exclusions that policyholders need to be aware of. For example, damages arising from war, foreign invasion, or terrorist activities are not covered under standard policies. Additionally, any loss caused by ionising radiation, pollution, or contamination is excluded.
Electrical failures, such as short circuits or arcing, and the leakage of electricity, including lightning strikes, are also not included in most home insurance policies. Other exclusions include losses related to the delay in recovery, reduction in the market value of the property, or any costs incurred in preparing an insurance claim. It's essential for policyholders to review their policy carefully to ensure they are fully aware of what is and isn't covered.
The cost of home insurance varies depending on the type of coverage and the sum insured. Policies typically range from ₹3,000 to ₹5,000 per year for coverage of up to ₹20 lakh. For instance, HDFC ERGO offers policies that cover buildings worth up to ₹10 crore and personal belongings worth up to ₹25 lakh. The price of home insurance is also influenced by factors such as the location of the property, its age, and its construction type.
When determining the premium, insurers typically assess the cost of construction and the carpet area of the property. For example, if the construction cost of your home is ₹4,000 per square foot and the property is 1,000 square feet, the insured sum will likely be ₹40 lakh. This ensures that the policy covers the total cost required to rebuild the property in case of total loss.
Additionally, home insurance policies often come with an auto-escalation feature that increases the sum insured by 10% each year. This feature ensures that your coverage keeps pace with inflation and rising construction costs.
Home insurance policies often offer optional covers that can be added to enhance protection. These may include coverage for valuable items such as jewellery, paintings, and antiques, which are insured for an agreed value. Additionally, policies can cover personal accidents that result from fire or other perils, debris removal after a disaster, and loss of rent or the cost of alternative accommodation if your home becomes uninhabitable.
If you have electronics, appliances, or other high-value items, you can opt for add-ons that protect against their loss or damage. Emergency expenses, such as hotel stays or moving costs to an alternative accommodation, can also be covered under certain policies, though these often come with an extra premium.
(By arrangement with livemint.com)