Home insurance in India has a key role to play in the protection of your house or building structure and valuable possessions or building content. Home insurance policy is a guarantee provided by the insurance company that combines insurance on the home, its contents the personal possessions of the homeowner, as well as insurance covering accidents that may happen at the house like fire and natural calamities. The coverage of the risk however depends on the type of policy.

There are mainly two types of home insurance in India.

• Building insurance
• Content insurance

Buildings Insurance

Buildings insurance is an important part of property investments. The mandatory obligation made by the housing finance companies has strengthened the need for insurance in conjunction with property investments. Insuring the building or building structure is important since it protects you against inevitable losses in case your building is destructed and debilitated in any natural or man-made calamities.

The housing finance companies are insisting on building insurance so that in the event of a disaster it can be repaired or rebuilt, as lenders don't want to be left without security for their loan. A home insurance policy should cover expenditure to rebuild your home in the event of it being totally destroyed or damaged to the point that complete rebuilding is necessary (in eventualities like earthquake, fire etc).

Different home insurance companies have different specifications for policy coverage. It is recommended that you check the terms and conditions of the policy. Home insurance companies in India mostly have home insurance plans that insure the building structure of your home for its reconstruction value. This is the cost incurred to reconstruct the home if it is damaged and not for its market value such as the cost of land etc. Sum insured is calculated by multiplying the built up area of your home with the construction rate per sq. feet.

Home insurance plan for buildings are usually meted out on conditions as per the policy terms arising out of conditions like

• Fire, Lightening, explosion of gas in domestic appliances
• Bursting and overflowing of water tanks, apparatus or pipes.
• Riot, Strike, Malicious or Terrorist Act
• Flood, Inundation, Storm, Typhoon, Hurricane, Tornado or Cyclone
• Damage due to earthquake, subsidence and Landslide (including Rockslide).
• Damage caused by Aircraft & Impact damage
• Third party liability and personal accident.

Content Insurance

Content insurance may be considered optional but with the threat of burglaries, natural disasters and fire, content insurance covers are rising in demand. Contents insurance for home insurance plans includes protection to movable goods, possessions or contents in the house; anything that is not a fixed parts of your home, for example your appliances, electronic goods, furniture and clothing.

Similarly as the modalities adopted in building insurance, different home insurance companies in India have different policies for content insurance. Most companies comply with insurance plans where a value equivalent to the market value of household contents i.e. the value for which this used item could be bought or sold in the market is covered as insurance.

The insured amount given against the perils for building or structure and its contents is assessed either on 'reinstatement value' basis -which is the value for replacing the item with a new item of same type and make; or on 'market value' basis -which is the reinstatement value less depreciation depending on the age of the item.

Content insurance offers protection against various perils including:

• Fires
• Storms/flooding
• Explosions
• Theft and vandalism
• Valuables such as jewellery, cameras and watches against all risks,
• Cover against all kinds of accidental breakage of plate glass fixed in doors and window frames.
• Loss/damage to domestic appliances due to electrical and mechanical breakdown.

Home insurance can be availed for both building and content combined. However, most home insurance plans in India excludes underinsurance of the property value, willful destruction of property, loss, damage or destruction caused by war perils, wear and tear and atmospheric conditions etc., damage due to an act of terrorism(unless specifically covered) and losses or damages incurred when premises are unoccupied beyond 60 consecutive days.