Ideal homes insurance amount

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Before taking a home insurance policy, you should be aware of the facts regarding the basis of determining insurance amount, payment mode, and the procedure to calculate the damages.

For construction:

While calculating coverage, insurance companies only the house into consideration.  They pay the construction cost in case of damage from any accident.  They do not consider the value of the site.  Insurance amount should be the one that is needed for reconstruction.

Since house area is measured in square feet, insurance companies will state the amount insured for square feet.  Foundation and compound are also included.

Effect of inflation..

If a long-term insurance policy is taken, take inflation also into consideration before calculating the renovation cost.

Experts fees:

It is not a joke to rebuild a house after damage.  Just buying the raw material isn’t enough.  Architects, surveyors, and construction people play key role here.  Some companies even bear their fees also.

Removal of debris:

When floods or earthquakes happen, buildings collapse.  Insurance company will play for renovation but what about removal of debris in such cases.  There are some insurance policies for that also like JCB vehicles used and labor expenses.

For workers:

A family is not only about the members of it but we will have maids, watchmen, etc.  Some build an outhouse for watchman.  In case of an accident, any damage caused to the household workers is covered under workmen’s compensation act.

In case of sale during policy period…

If you sell your house when the policy is still in place, you can cancel it and the company will pay the premium paid deducting some charges.

In case of insurance for society/apartment…

If the apartment owner or society manager takes insurance for the whole group, then the insurance is only partial for the individual homes.  Always take a comprehensive policy for complete insurance.

Ornaments and valuables:

Ornaments and other valuables are not covered under general home insurance…

Some other things that are not covered are

·         Gold and silver ornaments.

·         Handicrafts and antiques.

·         Ancient books.

·         Valuable information stored in computers.

·         Key documents.

·         Shares and bond papers.

·         Cash in paper form.

After considering all these, the insurance is provided to the requested amount.  Insurance of each item is determined separately based on its market value.  Equivalent or some part of their value is paid during claim.

Required insurance amount:

In order to cover the unexpected accidents, insurance should be taken to calculated amounts.  If you take cheap policies with lesser insurance amount, it may not come handy when needed.

In case of rented house…

·         Tenants can insure the appliances in their house.  You can insure important items, furniture, TV, computer, fridge, washing machine, valuable gold and silver ornaments, dresses, sofa, etc.

·         You have to inform their market value during policy purchase.  Some companies have set limit for time of usage of some items.  For examples, items being in use for more than 7 years are not covered.

·         The company will pay the amount required for repair or some part of the amount needed to buy a new one.  But, depreciation is taken into account while determining the value of these.