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Devirani Sharma, a school teacher in Mumbai, had insured her ancestral house in Kanpur with a householder’s insurance policy. However, the house would remain locked for most part of the year and Sharma would go there only for a few days during the annual school summer vacation. Little did Sharma know that her insurance company (a leading private sector insurance company) would refuse to pay the claim for a burglary in the house. Reason: The house was unoccupied for more than 30 days.

A householder’s insurance policy of several insurance companies lapses if the covered building/house remains unoccupied for at least 30 days. Rahul Aggarwal, director, Optima Insurance Brokers, said, “Therefore, a person should compare policies of several insurers and see that the policy he is buying does not have this condition as an exclusion.”

What does a householder’s insurance policy cover?

A householder’s insurance or a home insurance policy consists of two parts - insurance for the structure of the house against natural and man-made calamities. The second part of the insurance is for the contents of the house against burglary or damage. You can take either one of these covers or buy both. In case, you are staying in a rented house, you will be able to insure only the contents of the house.

The policy is divided into several sections, some of which are as under:

Fire and allied perils section: The policy covers losses to the structure of the house and its contents due to any natural and man-made calamities, such fire, lightning, aircraft damage, explosion, storm, cyclone, typhoon, flood and inundation and riots, among others.

Burglary and theft: A householder’s policy covers the loss of contents due to burglary, theft, loss of jewellery, gold ornaments, silver articles and precious stones kept under lock and key.

All risks: Loss or damage to jewellery and valuables due to accident or misfortune.

Domestic appliances, personal computer, baggage: Damage to electrical appliances due to electrical or mechanical breakdown.

Personal accident: The policy would pay for medical expenses resulting from an accident and weekly compensation during hospitalisation. It would also cover death due to accident.

Workman’s compensation: In case your maid, driver or any employee dies due to accident or injury, their liabilities would be covered as per the Workman’s Compensation Act.

Terrorism risk: Some insurers charge an additional premium for providing terrorism cover.

How to select the sum insured?

For insuring the building/structure of your home: The structure of your house is covered on a ‘reinstatement value’ basis. This is the cost of rebuilding your home with a similar new construction. It does not cover the market value.

For contents: Contents are covered on a ‘market value’ basis, which is the cost of buying a similar item of the same age. This includes household appliances, personal effects and miscellaneous items.

What is not covered in the policy?

This policy does not cover loss or damage caused due to war, wear and tear, nuclear radiation and related causes. Several policies also do not pay damage to cash, bullion, paintings, works of art and antiques.