Protecting Homes: Why insurance matters

Property Pulse

A home is among the most valuable assets a person owns. Families spend years saving to build a house or purchase an apartment, often investing additional lakhs in interiors, furniture and appliances. Yet many homeowners do not give insurance the same importance as health or motor insurance.

Heavy rains, floods, cyclones, fires, electrical short circuits and water leakages can cause considerable damage to residential properties. Home insurance offers financial protection against several such risks, helping owners meet repair, reconstruction or replacement expenses. However, understanding what a policy covers, its exclusions and the appropriate sum insured is essential before purchasing one.

Structure and contents: Two different covers

Home insurance generally provides two types of protection. Structure insurance covers the physical building, including walls, roofs, floors, doors, windows, permanent electrical wiring and sanitary fittings. Depending on the policy, compound walls, garages, water tanks and permanently installed solar panels may also be covered. Contents insurance protects household belongings such as televisions, refrigerators, washing machines, air conditioners, furniture and other appliances.

Jewellery, paintings and other valuables may require additional coverage. Some policies, including Bharat Griha Raksha, offer built-in coverage for general contents up to 20 per cent of the building sum insured, subject to a maximum of ₹10 lakh, when the relevant cover is opted for. High-value belongings may need separate declarations or additional protection.

What risks are covered?

Depending on the policy, protection may include damage caused by accidental fires and explosions, floods and inundation, cyclones, storms, earthquakes, landslides and specified water leakages. Burglary requires particular attention. Certain policies cover theft occurring within seven days of an insured event, such as a fire or flood, when it is connected to that incident. This does not automatically cover ordinary burglary involving forced entry into a locked house. Buyers should check whether separate burglary insurance or an appropriate add-on is available. Jewellery and valuables may also carry specific limits and documentation requirements.

How much insurance does your home need?

A common mistake is calculating the insurance requirement based on the property's market value. Building insurance should generally be based on reconstruction cost, excluding the land value. For instance, a 1,500 sq. ft. apartment with an estimated reconstruction cost of ₹2,500 per sq. ft. would have a building insurance requirement of approximately ₹37.50 lakh. Its market value could be considerably higher because of the land share and location. Furniture, appliances and interiors should be assessed separately. As construction costs increase, homeowners should periodically review their sum insured to ensure adequate protection.

Can tenants also buy insurance?

Yes. Tenants can purchase contents insurance to protect their furniture, appliances and personal belongings. The landlord generally insures the building structure, while tenants protect their own possessions. These covers serve different purposes. Common exclusions include normal wear and tear, ageing, gradual deterioration, construction defects and deliberate damage. For example, peeling plaster caused by years of dampness is generally not covered.

Buyers check

• A lower premium should not be the only deciding factor.
• Check separate coverage for the structure and contents.
• Verify protection against floods, earthquakes and cyclones.
• Examine burglary cover and limits on jewellery and valuables.
• Understand deductibles, sub-limits and exclusions.
• Preserve purchase bills, photographs and other claim-related documents.