Insure your car and house

There's no longer any truth to the phrase, 'once bitten, twice shy'. Today, if you're once bitten, you ought to be twice prepared.

So take the time to ensure that your household insurance and car insurance will provide the protection you need before disaster strikes.

Cover your home

General insurance companies offer policies that cover your home against natural calamities such as fire, floods, earthquakes, or land slides. You have to pay a premium based on the value of your home belongings and rest assured.

Home insurance policies offer two main covers - the structure of your house and the contents. Structure refers to any damage to the walls or floors of your home; content refers to your belongings such as electronic equipments, domestic appliances, furniture, and jewellery. You can buy a cover for either or both of these categories.

It is important to understand how value for sum assured is arrived at. The valuation for the structure is on a reinstatement basis. This means, the value required to replace your old item with a new one. The structure of your home is usually valued on this basis because, the policy will handle only any expenses related to reconstruction or fixing the house. It doesn't cover the market value of the house.

In case of contents, the claim is evaluated on a market value basis. This is the value of the item if you were to sell it just before the loss. Essentially, it is the purchase value minus the depreciation. It is important that you make a list of all contents of your home. Attach bills of purchase if possible. This will only make the claims procedure easier as it will help investigation. If you don’t have the list, the insurance company will scrutinize all the things and this will take a lot of time for getting the claim.

While buying a policy, always look for the hidden contents of the policy. Insurance companies usually don't cover any conscious damage to property. Valuables like gold, silver and bullion are not covered unless you opt for a special cover for these.

Also watch out for certain clauses in the fine print. Some companies don't let you make a claim for damages, if you had left your home unoccupied for more than 30 days, and the calamity occurred during that period.

Get car insurance

Motor insurance is divided into two parts - Policy A and Policy B. Policy A is an 'Act Liability' insurance. It is a compulsory insurance if you own a vehicle. It covers any body injury caused to a third person on the road or any damage done to his or her vehicle through an accident by your vehicle.

On the other hand, Policy B is a comprehensive cover, but it is optional. It covers additional losses such as loss or damage to your vehicle and personal accident benefit for the owner and passengers of the vehicle to the extent of sum assured.

In case of natural calamities, like floods, it pays only if you have taken Policy B. The policy also lets you take additional covers to extend the scope of items covered. These add-ons cover any loss or damage to the accessories within your car such as airconditioners, stereo systems etc.

If your vehicle is damaged beyond repair, or if it has been stolen, the claim is decided based on the Insured's Declared Value (IDV). IDV is calculated based on the current showroom price of the model of the vehicle, taking into account the depreciation rate, set at the beginning of each policy period.