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How to buy home insurance to protect against natural calamities

Natural disasters can strike anytime. While we can do little to prevent such calamities, we can secure ourselves with adequate insurance.

  • Take cover
No one can say when the next natural disaster will strike. “In India, only life, health and vehicle insurances are common. However, earthquakes and floods can strike any time. We need to protect our assets from such calamities,” says Abhishek Mishra, CEO, Bonanza Insurance. One way of doing so it is to opt for home insurance. Most home insurance policies automatically cover damage due to cyclones, earthquakes and the like.

Household insurance covers the structure and furniture and fittings inside a house. While it is generally suggested that one opt for a comprehensive plan when it comes to car insurance, choosing the right household insurance policy can be trickier.

  • Buy structure cover only if needed
Before buying a comprehensive home insurance policy, find out if you need to take cover for the structure. Most housing societies insure the building and therefore, individual flat owners don’t need to opt for structure cover. “Flat owners need cover for the contents inside the house,” says Mishra. However, check if the policy bought by the housing society covers reconstruction costs and not only the depreciated value of the building. Several housing societies settle for depreciated building value to keep premiums low.

  • Go with the detailed plan for contents
If you want to insure the contents of the house, there are two plans to choose from—standard and detailed. Most insurers offer standard plans that assume a standard set of assets. However, experts bat for the detailed plan. “List every asset and take coverage for them. This offers several advantages. By giving full details at the time of taking the policy, claim settlement is smoother,” says Tarun Mathur, Chief Business Officer, General Insurance, Policybazaar. Standard plans also usually leave out costs related to repairs.

  • Go for replacement costs for contents
Experts say it makes sense to opt for replacement cost, instead of depreciated value, for household assets. “Houseowners should note that this will push up insurance costs,” says Sanjay Dutta, Chief, Underwriting and Claims, ICICI Lombard General Insurance. However, this will be useful at the time of claim. Assume a television you bought two years ago is damaged by lightning and the repair cost is Rs 8,000. The insurer will not pay the full amount if you do not opt for replacement cost.

  • Take precautions after insuring
Insurance laws ask you to take every step to protect your assets. Insurance companies usually educate people about this. “Once Cyclone Fani was announced by IMD, we sent out messages about ways to protect your assets like car, house, etc,” says Dutta. These measures are standard procedures like sealing any portion of the house where there is a chance of leakage and repairing old and creaky windows.

  • Protect your documents
Keeping important documents like degree certificates, registration documents of the house, etc in bank lockers is a wise step. Damage of critical documents can create serious problems in future. “Due to their design, bank lockers can withstand flood, fire, etc and therefore, will be safer than the house.” says Mishra. Please save insurance related documents also from damage because they would be needed to make a claim after any disaster.

  • Follow correct steps for claims
Insurers are usually lenient towards claims after natural disasters and therefore, claim settlement may not be difficult. “After any disaster, submit a claim intimation to the insurer. If it is fire related, you need to submit an FIR and the fire brigade’s report. Insurers release payment after getting reports from their surveyors,” says Mishra. No FIR is needed if damage is due to other reasons like flooding, short circuit or power surge.
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