I am buying a second home in Pune. I will be getting its possession by the year-end. Since my husband refrains from giving it on rent, it will be used more as an investment avenue. I would like to get my home insured as soon as we get it. Is there a specific product which I need to buy, as the house will largely remain empty? Also, how are home policies priced?
Home insurance, or the ‘householder policy’ as it is commonly called, has two major covers. The first is for structure and/or contents against fire and allied perils which include 14 covers like fire, lightning, flood, storm, inundation, landslide and explosion, whereas the second is a ‘Burglary and Theft cover’ for contents.
The foremost point that any person should keep in mind before choosing a home insurance policy on a new property is if he/she has any insurable interest on the property. If the home owner has still not received possession of the house, then the insurable interest has not been transferred from the builder to the home owner. This would also mean the property is still under construction and the builder would have taken a project insurance on the same. Hence, a home insurance policy is not required and cannot be taken. Where the possession has been given and the home owner has bought the house as an investment avenue, then the structure can be covered for fire and allied perils. However, one of the conditions of most home insurance policies is that the property not remain un-occupied for more than 30 days at a stretch during the policy period.
If the home is not rented or leased but maintained by a caretaker, the home insurance policy will remain valid for the insured period. Before buying a policy, if the home owner mentions that the house will be unoccupied for more than 30 days at a stretch, the insurance company can deny writing the risk.
Long-term covers are also available for structures where the cover period can range from three years to 15 years. The long-term policy offers discount on the premium which might go as high as 50 per cent if the period is 10 years or more. We always recommend that customers choose a home insurance cover based on their needs and not on the premium; eventually a house is one of the most prized possessions that a person has and it takes a lifetime to build one.
The writer is the MD and CEO of Tata AIG General Insurance.