Tuesday, December 16, 2014

How secure are your home contents?

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How secure are your home contents?

 

Find out the conditions under which the insurance company will cover your gadgets and appliances, and not reject the claim.

 

Buying a house is probably the single largest investment in one's lifetime, spending as one does a substantial chunk of one's savings on the prized possession. The spending does not stop there. A considerable sum then goes into kitting out the interiors, which increases the value of the property. Yet, scores of home owners fail to insure this asset, typically due to lack of awareness. Here are the five common situations under which you may require a householder insurance plan, and the circumstances under which the contents may not be insured.

1 You drop and damage your LED TV, microwave or computer.

If you damage a gadget, a home insurance policy may not come to your rescue. Insurers can attribute the damage to carelessness and reject the claim.

However, some insurers are more accommodating. A basic home insurance policy covers only risks like fire, earthquake, burglary, etc. However, if one opts for the all risk (functional equipment) cover for contents as well, the policy will insure the cost of damage to an equipment while shifting within the house.

Bear in mind that the policy will only reimburse the cost of repair or, in case of total damage, the cost of equipment, subject to depreciation. Certain insurers cover accidental damage subject to the age of the equipment. For instance, Bajaj Allianz My Home All Risk policy offers coverage for equipment that is up to 10 years old. For portable equipment, it is five years.

In our policy, we have a section called breakdown, which covers electronic and electrical items in the house for electrical and mechanical failure. Along with this, audio and audio-video appliances are also covered for accidental damage.

2 Sudden surge in power damages your air conditioner, refrigerator, television.

Most insurers do not cover any damage to an electrical equipment caused by power fluctuation. One can stake a claim only if the appliance is destroyed due to a fire, which is the result of a power fluctuation or short circuit. Insurance companies such as Bajaj Allianz cover electrical and mechanical breakdown on the condition that the equipment is not more than 10 years old.

3 Domestic help or a relative is involved in a theft in your house.

Some policies, such as the HDFC ERGO Home Insurance, cover valuable contents, including gadgets and ornaments, against the incidence of theft--irrespective of who the culprit is--if it happens in your absence. You will have to file a first information report (FIR) before making a claim. However, insurers can simply deny the claim citing that the loss has been caused by a person who had authorised access to the house.

4 You leave a gadget or an appliance on, and it leads to fire.

If the insured can establish that he or she did not deliberately cause fire, the loss is typically covered. Damage to household equipment due to fire, as long as it is not due to wilful negligence, is covered under our householder's policy, provided the equipment is less than 10 years old.

5 A storm uproots a tree or a pole that damages your house.

A storm is a special peril and home insurers compensate the insured for the loss or damage to property due to a natural calamity--storm, cyclone, typhoon, tempest, hurricane, tornado, flood or inundation. In case of a storm, there are high chances of damage to the house due to uprooting of trees or collapse of man-made structures. Such losses are covered under a householder's policy. However, if rainwater enters your house and causes damage, say, to the contents in the basement, the policy may not compensate you. Keep in mind that the rainwater entering the house will not be covered under the policy unless there is a flood situation. It means the relevant authority in the particular area has to declare the same. If the contents in the basement are specifically mentioned in the policy as part of the contents insured, only then will they be covered.

Things to keep in mind

Since the terms and conditions of various household policies differ, it's important to go through these carefully. These policies come with a compulsory deduction. It can either be a percentage of the claim amount, usually around 5%, or `2,000­20,000, whichever is higher, for cover. This is the sum that you will have to pay from your pocket before you can avail of the indemnity cover. For electronic and electrical items, the deductible could as low as `250. The insurer also considers the deprecation, depending on the age of the gadget, for compensation. If the claim is legitimate, each one is cleared, even a minor claim of `1,000 or less. The premiums of household insurance policies are in the range of `2,000-10,000.


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