What does home insurance cover you for?

Home Insurance is split into two types of cover; buildings insurance and contents insurance. Usually insurance providers will offer the option of taking each type individually as well as offering a deal which includes both. Most insurers will tell you in detail about what their policies cover you for on their websites. It’s always important to know you’re insurer and if you have any questions about items that you’re not sure will be covered, be sure to ask them before you take out the policy.
In general both buildings and contents insurance will cover you for loss or damage caused by fire, lightning, explosions, earthquakes, smoke, riots, theft, subsidence, storms and floods.


Buildings insurance will generally cover structural areas like walls, ceilings, floors, roofs windows, doors, drainage, garages and any outbuildings, as well as permanent fixtures such as work-tops and bathroom suites.
Contents insurance will generally cover you for items categorised as ‘items you’d take with you if you were to move’ for example sofas, fridges, bikes, T.V’s, computers, beds, curtains. Depending on the provider some will also include or offer additional cover on items like: large amounts cash kept in the home, jewellery, external locks and freezer contents etc.
You can understand why most people opt for the package deals that cover both buildings and contents. Again it’s vital that you check with your provider what your policy covers you for, make a list of everything and go through over the phone before making any sort of payment.

Importance of home insurance

Are we personally capable to financially withstand if our property were to be hit by a Tsunami? The dream of the average lower or middle class people in India is to own a house with probably an area of 1000 sq ft costing at least 15 lakh rupees.

Most people borrow a loan to help fund their dream. What if this dream home is destroyed due to a natural disaster?

Who can we blame for this unexpected happening? Though the government will support with relief fund but will this fund help us to rebuild the same house which we had? Or can you save Rs 15 Lakh in cash to rebuild the house?

The basic five elements of nature – earth, air, fire, water and space along with the various forces of nature, can create any sort of disturbance in this universe. This disturbance may be once in thousand years, this day may be today or tomorrow or a week later. But it’s very much unexpected.

Are we prepared to withstand this loss financially? Naturally we may not be prepared because the impact or cost of any natural disaster may be abnormally high. But on a personal front we do have some recourse

The solution is to insure the home under standard fire & special perils policy given by almost all general insurance companies. It could be good thing to do so when you apply for a home loan as there maybe some benefits attached to it.

Fire and Special Peril Policies provide protection against damages/fortuities triggered by the following perils:

1. Fire

a) Fire – Excluding destruction or damage caused to the property insured by

- Its own fermentation, natural heating or spontaneous combustion.

- Its undergoing any heating or drying process.

b) Lightning

c) Explosion/Implosion

d) Excluding destruction or damage caused to the boilers (other than domestic boilers), by its own explosion/implosion

e) Aircraft Damage

f) Destruction or damage caused by Aircraft, other aerial or space devices and articles dropped there from excluding those caused by pressure waves

g) Riot, Strike, Malicious and Terrorism Damage

h) Loss of or visible physical damage or destruction by external violent means directly caused to the property insured

i) Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation

j) Impact Damage

k) Impact by any Rail/Road vehicle or animal by direct contact

l) Subsidence and Landslide including Rock slide

m) Bursting and/or overflowing of Water tanks, Apparatus and Pipes

n) Missile Testing operations

o) Leakage from Automatic Sprinkler Installations

p) Bush Fires

2. Earthquake

The above mentioned covers are more than sufficient for any house building. This covers all natural disasters and any kind of fire occurrences. The fire can be of any sort. For example cooking cylinder bursting is also covered

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But not everything is covered!

a) 5% of each and every claim resulting from the operation of Lightning. STFI (Storm, Tempest, Flood and Inundation) and Subsidence & Landslide including Rockslide covered under this Policy.

b) Loss, destruction or damage caused by war.

c) Loss, destruction or damage directly or indirectly caused to the property insured by nuclear forms.

d) Loss, destruction or damage caused to the insured property by pollution or contamination.

e) Loss, destruction or damage to bullion or unset precious stones, works of art for small amount exceeding Rs. 10000/-, manuscripts, plans, etc.

f) Loss, destruction or damage to the stocks in Cold Storage premises caused by change of temperature.

g) Loss, destruction or damage to any electrical and/or electronic machine, apparatus, fixture or fitting (excluding fans and electrical wiring in dwellings) arising from or occasioned by over running, excessive pressure, short circuiting, arcing, self-heating, or leakage of electricity, from whatever cause (lightning included)

h) Expenses necessarily, incurred on

i) Architects, Surveyors and Consulting Engineer’ Fees and

j) Debris Removal by the Insured following a loss, destruction or damage to the property

k) Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever.

The Exciting news!

Premium – Surprisingly the premium for this product is 0.06% + Service Tax. This means per lakh you may have to pay Rs. 67 per annum. What’s even more interesting is that one can avail a 50% discount on premium if one wishes to insure his/her house for 10 years by paying the premium upfront.

Valuation of the Building – It is advisable to take the valuation at the prevailing market price.

So the next time you hear of natural calamities destroying houses or wiping out villages, you can rest assured that your family can overcome the financial burden caused if god forbid such a thing occurs to you. All that you would need is to spend a few hundreds to get covered and get peace of mind too!

Why do I need insurance?

What types of insurance and how much coverage to purchase for your CHDO are important management decisions. The business environment is constantly changing, and your managers must take the time to understand the risks your organization faces and choose how to manage them. This chapter briefly explains the types of insurance that are available, suggests ways to minimize your risk, discusses insurance companies, and gives a few pointers on how to administer your insurance program.

Not-for-profit organizations, like any other legal entity, need insurance coverage. While your organization needs to have insurance for a variety of possible occurrences, it should also take the time to plan and implement procedures that will reduce the chance that it will need to take advantage of that insurance.  For example, your CHDO should:

·                      Carry workers’ compensation insurance, but at the same time, develop an employee safety program, examine your workplace for hazards, and take the necessary steps to eliminate those hazards.

·                      Carry directors and officers (“D & O”) liability coverage, but at the same time, develop a board of directors and managers who carry out their duties responsibly.

·                      Bond your employees and board members, but at the same time, develop financial controls that minimize the chance of losing  money and the ability of employees or board members to steal from the organization.

Insurance is complicated. Use this chapter as an educational starting point. Develop a relationship with an insurance agent or broker who will take the time to educate you and help you design and implement systems and procedures that will reduce the likelihood that your organization will file a claim or defend a lawsuit.

Does your CHDO currently have liability insurance? Besides being complicated, insurance is also costly. Often, by working with one agent for all your CHDO’s insurance needs, you will be able to get package discounts on property and liability insurance. After a year or two with no claims, your good track record will translate into lower premiums or slower rate increases. For example, state unemployment insurance drops from 2.7% of payroll to 0.35% of payroll if you have no claims for 18 months. That is an 87% decrease!

Your board and staff must exercise the level of care a reasonable person would exercise to reduce the likelihood of insurance claims. As the saying goes, an ounce of prevention is worth a pound of cure.