Top tips for buying home insurance- Yashish Dahiya CEO, PolicyBazaar.com

A cloudburst in Uttarakhand and Arunachal Pradesh, heavy rains and floods in Mumbai and Chennai, Earthquakes in  Delhi-NCR, cyclones in Odisha and Andhra Pradesh and of course fire in just about any part of the country, the  damage caused by these disasters can never be fully compensated. However, what you can definitely do is give yourself financial protection by insuring your property. Here are few tips on how you can provide cover for your most prized possession - your home.

Cover size

Now the purpose of buying a home insurance is to provide cover for your property in case there is any damage caused to it by either natural or man-made disaster. Thus, buying an adequate cover is imperative. So, how do you calculate what is the size of the cover you should buy for your apartment? It is simple mathematics. Simply find out the current reconstruction cost of the house and the area. For instance, if you own a 800 square feet house and the current reconstruction cost pr square feet is Rs 2,500, then the structure insurance cover should be at least Rs 20 lakh (Cost of reconstruction per square feet x area in per square feet). Ensure that you are being futuristic while buying an insurance cover for your house.

Know your needs

Do you own an apartment or a bungalow? Is it a flat or a floor that you want to get insured? Understand that home insurance is of two types-content and structure. If you own a flat, most likely your builder would have got the entire building, which includes the structure of your flat, insured. Thus, in such a scenario, you should only get the contents insured as the structure has already been insured. You can calculate the required cover for the contents of the house on the basis of current market value, i.e, the cost of purchasing a new item of the same or similar model in the market or you could hire a surveyor, an expert to do the job.

However, if you own an individual house then it is advisable to get both structure and content insurance. Typically, items older than eight years are not covered by insurers. The claim amount will be given after deducting the depreciation as per the age of the item. For instance, let's say the current reconstruction cost of your 3000 square feet house is Rs 30 lakhs and the current market value of contents which includes furniture and electrical items is valued at Rs 5 lakhs. Now, if there is a fire after 5 years, the insurer will calculate the depreciation at 10% per annum and will pay nearly Rs 3 lakh after taking into account the depreciation value of the contents along with the sum assured for the structure. Thus, the total payout will be roughly Rs 33 lakh.

Look out for riders

In today's day and age, security is a must for your dream home. And while everyone does have a security guard or a CCTV at home, it definitely isn't enough to protect your house from being robbed. In fact, statistics suggest that there were over 1 lakh burglary cases were registered in India in 2013 and at least four burglary cases are reported every day. And that's why it is important to watch out for riders such as burglary cover that compensates you if your house has been robbed.

Now if you are wondering what is the difference between content insurance and burglary cover then allow us to explain. Content insurance gives you protection against damages due to fire or any other natural calamity while they are in the premises of the house. On the other hand, burglary cover, as the name suggests, compensates you for the loss of valuables because of theft.  Normally, the burglary cover is equivalent to the content cover chosen by you.

Besides this, insurance companies also offer add-on covers for electric appliances, alternative accommodation among others. While opting for a home insurance, you should go for these covers as they provide cover for breakdown of domestic appliances like washing machine etc.  For instance, if there is damage to the property you reside, the insurer will pay the rent for your alternative accommodation if you have bought this additional cover.

To conclude, just like it is important to protect yourself and your loved ones, you need to protect your dream house from every damage. And with the rising number of natural and man-made disasters, this cover has increasingly become crucial for you to have a sound sleep. After all, it's your home sweet home!

By Yashish Dahiya, Co-founder & CEO, PolicyBazaar.com