PROJECT REPORT ON

TO STUDY THE SIGNIFICANCE AND IMPLICATION

OF HOME INSURANCE IN INDIA

BACHELOR OF COMMERCE
(BANKING & INSURANCE)
SEMESTER VI
2014-2015

SUBMITTED BY:
KANCHAN MANDALE
ROLL NO: 16

K. M. AGRAWAL COLLEGE OF ARTS, SCIENCE & COMMERCE

GANDHARE , KALYAN (W).

UNIVERSITY OF MUMBAI
2014 2015

PROJECT REPORT ON

TO STUDY THE SIGNIFICANCE AND

IMPLICATION OF HOME INSURANCE IN INDIA

BACHELOR OF COMMERCE
(BANKING AND INSURANCE)
SEMESTER VI
2014-2015

SUBMITTED
IN PARTIAL FULLFILLMENT OF REQUIREMENT FOR THE AWARD OF
DEGREE OF B.COM (BANKING&INSURANCE)

KANCHAN MANDALE
ROLL NO: 16

K.M. AGRAWAL COLLEGE OF ARTS, SCIENCE & COMMERCE

GANDHARE, KALYAN (W).
2

K.M. AGRAWAL COLLEGE OF ARTS, SCIENCE, & COMMERCE,

KALYAN
(Conducted by Kalyan Citizens Education Society)
(Affiliated by University of Mumbai)

BACHELOR OF BANKING AND INSURANCE

CERTIFICATE
THIS IS TO CERTIFY THAT MISS. KANCHAN H. MANDALE OF
T.Y.B.COM (BANKING & INSURANCE) (SEMESTER VI) HAS
SUCCESSFULLY COMPLETED THE PROJECT ON TO STUDY THE
SIGNIFICANCE AND IMPLICATIONS OF HOME INSURANCE IN
INDIA, UNDER THE GUIDANCE OF MR.SUJIT SINGH

PROJECT GUIDE

PRINCIPAL

COURSE CO-ORDINATOR

INTERNAL EXAMINER

DECLARATION

I, KANCHAN HARISH MANDALE, student of T.Y.B.Com Banking &

Insurance semester VI (2014-2015) hereby declare that I have completed the
project on TO STUDY THE SIGNIFICANE AND IMPLICATIONS OF
HOME INSURANCE IN INDIA.
I further declare that the information imparted is true and fair to the best of
my knowledge.

SIGNATURE
KANCHAN HARISH MANDALE
Roll no.16

ACKNOWLEDGEMENT
During the course of this project, Ive been helped and supported by a lot of people
whose names if not mentioned, would be inconsiderate on my part. Id like to
thank all of them.
I would like to thank my guide Mr. SUJIT SINGH who guided me throughout and has
been a helpful guide. Working under his guidance has been great experience.
Im deeply obliged to our college Liberian who guided me through the reference
book, without which my project wouldnt have seen the light of the day.
Most of all, I wish to thank my family for dealing with me patiently and
supporting me whilst I was working on this project

EXECUTIVE SUMMARY
5

Home owners is the property/casualty insurance industry's third largest line of business
by premium volume. But since 1980, home owners has achieved poor financial results.
Catastrophes certainly bear much of the blame. However, this study concludes that part of
the problem is a pattern of enhancements insurers have made in their policy forms. The
number of types of loss insured under a typical policy increased, contributing to an
acceleration in losses that has outstripped premium growth.
Over the years, insurers repeatedly broadened the home owners coverages to address
growing customer needs, increase market share, and meet competition. But many
coverage

enhancements

provided

questionable

advantages

for

insurers.

The

enhancements also made the programs more complex and added to their cost. The
cumulative effect of the changes was more losses and reduced profitability.
Homeowners costs reflect the evolution of coverage enhancements. Over time, through
the use of insurers' loss and premium experience in ratemaking, homeowners rates
recognize these costs to the extent permitted by marketplace forces. But it may take many
years for the ratemaking data, and eventually rates, to reflect fully the costs of a single
enhancement. A series of individual enhancements can have a continuing and cumulative
effect, with rate levels constantly playing "catch-up" with the forces driving costs.

The catastrophes of the last seven years particularly Hurricanes Hugo and Andrew
have led to unusually poor underwriting results. But even before 1989, the homeowners
line of insurance exhibited high loss ratios, high expenses, and low investment return,
making it a difficult line for insurers to write profitably.
From 1980 to 1984, homeowners operating ratios fluctuated little, averaging a marginally
unprofitable 100.3%.[1] Between 1986 and 1988, homeowners was profitable, with an
average operating ratio of 95.2%. Homeowners experience began to deteriorate in 1989,
the year of Hurricane Hugo. From 1989 to 1995, the homeowners operating ratio
averaged 115.6% well above the average ratios of 97.3% for personal auto, 100.2%
for commercial property, and 95.8% for other commercial lines.

INDEX
CHAPTER

PARTICULARS

No.

PAGE
No.

PREFACE
1

INTRODUCTION

9-13

HISTORY OF HOME INSURANCE

14-20

HOME CLAIM PROCEDURE

21-33

TOP REASON TO BUY HOME INSURANCE

34-38

OPTION AVAILABLE

39-42

TYPES OF HOME INSURANCE

43-55

MONOPOLY PLAYERS

56-60

DIFFERENCE BETWEEN HOME WARRENTY VS HOME

61-68

INSURANCE
CONCLUSION

69

WIBILIOGRAPHY

70

PREFACE

Homeowners costs reflect the evolution of coverage enhancements. Over time, through
the use of insurers' loss and premium experience in ratemaking, homeowners rates
recognize these costs to the extent permitted by marketplace forces. But it may take many
years for the ratemaking data, and eventually rates, to reflect fully the costs of a single
enhancement. A series of individual enhancements can have a continuing and cumulative
effect, with rate levels constantly playing "catch-up" with the forces driving costs.

OBJECTIVE

To study the consumer perception regarding home insurance

To study about factor affecting home insurance.
To find out the satisfaction level of customer.
To find out the most preferred channel.

RESEARCH METHODOLOGY.
Secondary data:My secondary data was collected from the websites.

CHAPTER 1
INTRODUCTION

Home insurance also commonly called hazard insurance or homeowner's insurance

(often abbreviated in the US real estate industry as HOI), is a type of property
insurance that covers private residence It is an insurance policy that combines
various personal insurance protections, which can include losses occurring to one's home,
its contents, loss of use (additional living expenses), or loss of other personal possessions
of the homeowner, as well as liability insurance for accidents that may happen at the
home or at the hands of the homeowner within the policy territory.
Homeowner's policy is referred to as a multiple-line insurance policy, meaning that it
includes both property insurance and liability coverage, with an indivisible premium,
9

meaning that a single premium is paid for all risks. In the US standard forms divide
coverage into several categories, and the coverage provided is typically a percentage of
Coverage A, which is coverage for the main dwelling.
The cost of homeowner's insurance often depends on what it would cost to replace the
house and which additional endorsements or riders are attached to the policy. The
insurance policy is a legal contract between the insurance carrier (insurance company)
and the named insured(s). It is a contract of indemnity and will put the insured back to the
state he/she was in prior to the loss. Typically, claims due to floods or war (whose
definition typically includes a nuclear explosion from any source) are excluded from
coverage, amongst other standard exclusions (like termites). Special insurance can be
purchased for these possibilities, including flood insurance. Insurance is adjusted to
reflect replacement cost, usually upon application of an inflation factor or a cost index.
The home insurance policy is usually a term contract, i.e. a contract that is in effect for a
fixed period of time. The payment the insured makes to the insurer is called the premium.
The insured must pay the insurer the premium each term. Most insurers charge a lower
premium if it appears less likely the home will be damaged or destroyed: for example, if
the house is situated next to a fire station or is equipped with fire sprinklers and fire
alarms; if the house exhibits wind mitigation measures, such as hurricane shutters or if
the house has a security system and has insurer-approved locks installed. Perpetual
insurance, a type of home insurance without a fixed term, can also be obtained in certain
areas.
insurance is over one and one-half centuries old in India. The First general insurance
company, Titan Insurance Company Ltd., was established in1850.Life insurance came to
India from the U.K. in 1880, with the establishment of the Oriental Life Assurance
Company in Calcutta. By 1938,the insurance market was buzzing with 176 companies-both life and non-life. In 1956, the Government of India recognized that malpractice had
entered the management of the life insurance. Consequently, the life insurance industry
was nationalized under the Life Insurance Corporation (LIC) of India. Although efforts
were made to maintain an open market for the general insurance industry by amending
10

the Insurance Act of 1938 from time to time, malpractice escalated beyond control. Thus,
the general insurance industry was nationalized in 1972.
RECENT INITIATIVES
Privatization is expected to foster competition, innovations and greater awareness on the
need for buying insurance services and variety of products. The IRDA bill Passed by the
parliament was an important development in the field of Insurance business. The IRDA
Act marks an end to the monopoly of the government in the insurance sectors by opening
it up to private players. It gives priority in the Utilization of the policyholders funds for
development of society and Infrastructure sector Home insurance, also commonly called
hazard insurance or homeowners insurance(often abbreviated in the real estate industry as
HOI), is the type of property insurance that covers private homes. It is an insurance
policy that combines various personal insurance protections, which can include losses
occurring to one's home, its contents, loss of its use (additional living expenses), or loss
of other personal possessions of the homeowner, as well as liability insurance for
accidents that may happen at the home. It requires that at least one of the named insured
occupies the home. The dwelling policy (DP) is similar, but used for residences which
don't qualify for various reasons, such as vacancy/non-occupancy, seasonal / secondary
residence, or age. It is a multiple line insurance, meaning that it includes both property
and
Liability coverage, with an indivisible premium, meaning that a single premium is paid
for all risks. Standard forms divide coverage into several categories, and the coverage
provided is typically a percentage of Coverage A, which is. The insurance policy itself is
a lengthy contract, and names what will and what will not be paid in the case of various
events. Typically, claims due to floods, or war (whose definition typically

What is home insurance?

11

Home insurance can mean building insurance, contents insurance or both. Building
insurance is often taken out with a mortgage to cover the cost of rebuilding your home
should the worst happen. It generally covers you for damage to your home caused by fire,
bad weather, natural disasters, damage caused by burglary or attempted burglary, manmade disasters like riots, explosions, vandalism. Coverage will differ between home
insurers so it is important to check your policy documents.
Mortgage lenders can ask to see proof of buildings insurance as part of their mortgage
offer so if you are a first time buyer about to buy a house or a buyer about to move
properties, you should get a insurance quote away. The amount of buildings insurance
you take out needs to cover the cost of replacing the building itself and all permanent
fixtures and fittings inside it.
As well as the actual property, buildings insurance can include garages, sheds, driveways,
outdoor hot-tubs (if youre lucky enough to have one), swimming pools, paths, walls and
even hedges. Some companies dont necessarily offer coverage for all these items as
standard individual policies do differ in what they include so remember to check the
policy details to see what is covered. ensure cover all of these items and should your
home be damaged so badly that you need to stay elsewhere, ensure will also pay for
alternative accommodation. This type of peace of mind can really make the difference,
helping take some of the pressure out of an extremely stressful situation.
Buildings insurance is also useful for non-home owners, helping to protect against any
financial liability should accidental damage happen to a rented property.
Contents insurance usually covers all the contents in your home against theft or attempted
theft, fire, water damage, storms or floods, smoke, lightning and malicious damage.
Contents refers to all the things in your home that if you were to move, youd take with
you, including furniture, electrical equipment, clothes and bikes etc, everything that isnt
a permanent and fixed fitting. At ensure our contents insurance also includes accidental
damage for your mirrors, glass furniture tops, any fixed glass in furniture and ceramic
hobs.
12

Standard contents insurance cover often works out to be the cheapest, but you need to
make sure that it really covers the things that matter to you. ensure policies can be
tailored to your needs if the basic policy isnt enough. Be honest with yourself about the
amount of cover you need; cutting back on the amount you take out could mean that
when you come to make a claim, you are not fully covered.
Some insurance companies like ensure include cover for contents in your garden too
but not all of them do. These days, with mechanical gardening tools, kids toys, bicycles
and trampolines, you can have an awful lot of expensive things in your garden. ensure
policies cover up to 2000.
A good money saving tip is to take out your building and contents insurance from the
same company as discounts can be available ensure offers a discount as well as a
contents no claim discount of up to 45%. Should you take out building and contents
insurance from ensure, we will give you an instant 40% discount just to say thank you. If
you chose to stay with ensure you can earn a further 1% discount for every claim free
year, up to 45% no claim discount. Take a look at the premiums online in just a few
minutes right here with an ensure home insurance quote

CHAPTER 2
13

HISTORY OF HOME INSURANCE

The first homeowner's policy per se in the United States was introduced in September
1950, but similar policies had existed in Great Britain and certain areas of the United
States. In the late 1940s, US insurance law was reformed and during this process multiple
line statutes were written, allowing homeowner's policies to become legal.
Prior to the 1950s, there were separate policies for the various perils that could affect a
home. A homeowner would have had to purchase separate policies covering fire losses,
theft, personal property, and the like. During the 1950s, policy forms were developed
allowing the homeowner to purchase all the insurance they needed on one complete
policy. However, these policies varied by insurance company, and were difficult to
comprehend
The need for standardization grew so great that a private company based in Jersey City
New Jersey Insurance Services Office also known as the ISO, was formed in 1971 to
provide risk information and it issued simplified homeowner's policy forms for reselling
to insurance companies. These policies have been amended over the years.
Modern developments have changed the insurance coverage terms, availability, and
pricing. Homeowners insurance has been relatively unprofitable, due in part to
catastrophes such as hurricanes as well as regulators' reluctance to authorize price
increases. Coverages have been reduced instead and companies have diverged from the
former standardized model ISO forms. Water damage due to burst pipes in particular has
been restricted or in some cases entirely eliminated. Other restrictions included time
limits, complex replacement cost calculations (which may not reflect the true cost to
replace), and reductions in wind damage coverage.
Policies
The Insurance Services Office has standardized the following homeowner's insurance
policy forms in general use names of the forms are given per the following reference

14

HO0 Dwelling Fire Form

A form that provides coverage on a home against fire, smoke, windstorm, hail,
lightning, explosion, vehicles, and civil unrest. It does not cover your personal
property, personal liability, or medical expenses. It is the type of policy your
mortgage lender will buy for you if you let your homeowner policy lapse.
HO1 Basic Form
A basic policy form that provides coverage on a home against 11 listed perils;
contents are generally included in this type of coverage, but must be explicitly
enumerated. The perils include fire or lightning, windstorm or hail, vandalism or
malicious mischief, theft, damage from vehicles and aircraft, explosion, riot or
civil commotion, glass breakage, smoke, volcanic eruption, and personal liability.
Exceptions include floods, earthquakes. Most states no longer offer this type of
coverage.
HO2 Broad Form
A more advanced form that provides coverage on a home against 16 listed perils
(including all 11 on the HO1). The coverage is usually a "named perils" policy,
which lists the events that would be covered.
HO3 Special Form
The typical, most comprehensive form used for single-family homes. The policy
provides "all risk" coverage on the home with some perils excluded, such as
earthquake and flood. Contents are covered on a named peril basis. (Note: "all
risk" is poorly termed as it is essentially named exclusions (i.e., if it is not
specifically excluded, it is covered).)
HO4 Contents Broad Form
The Contents Broad, or Tenants, form is for renters. It covers personal property
against the same perils as the contents portion of the HO2 or HO3. An HO4

15

generally also includes liability coverage for personal injury or property damage
inflicted on others.
HO5 Comprehensive Form
Covers the same as HO3 plus more. On this policy the contents are covered on an
open peril basis, therefore as long as the cause of loss is not specifically excluded
in the policy it will be covered for that cause of loss.
HO6 Unit-Owners Form
The form for condominium owners. It insures your personal property, your walls,
floors and ceiling against all of the perils in the Broad Form.
HO8 Modified Coverage Form
The form is for the owner-occupied older home whose replacement cost far
exceeds the property's market value.

Coverage rates
According to a 1998 National Association of Insurance Commissioners (NAIC) report,
83% of homes were covered by owner-occupied homeowners policies. Of these, 87% had
the HO3 Special, and 8% had the more expensive HO5 Comprehensive. Both of these
policies are "all risks" or "open perils", meaning that they cover all perils except those
specifically excluded. 3% were the HO2 Broad, which covers only specific named perils.
Others, at 1% each, include the HO1 Basic and the HO8 Modified, which is the most
limited in its coverage. HO8, also known as older home insurance, is likely to pay only
actual cash value for damages rather than replacement.
The remaining 13% of home insurance policies were covered by renter's or condominium
insurance. Two-thirds of these had the HO-4 Contents Broad form, also known as renters
insurance, which covers the contents of an apartment not specifically covered in the
blanket policy written for the complex. This policy can also cover liability arising from
16

injury to guests as well as negligence of the renter within the coverage territory. Common
coverage areas are events such as lightning, riot, aircraft, explosion, vandalism, smoke,
theft, windstorm or hail, falling objects, volcanic eruption, snow, sleet, and weight of ice.
The remainder had the HO-6 Unit-Owners policy, also known as a condominium
insurance, which is designed for the owners of condos and includes coverage for the part
of the building owned by the insured and for the property housed therein. Designed to
span the gap between the coverage provided by the blanket policy written for the entire
neighborhood or building and the personal property inside the home. The condominium
association's by-laws may determine the total amount of insurance necessary. E.g., in
Florida, the scope of coverage is prescribed by statute 718.111(11)(f).
In addition, about 2.4% of homes were covered by a dwelling fire policy (the term
dwelling fire comes from the fact that, originally, these home owner's policies only
covered fires) which covers property damage to a structure and is typically sold to
noncommercial owners of rented houses. It may also cover the owner's personal property
(such as appliances and furnishings). The owner's liability may be extended from their
own primary home insurance and, thus, may not comprise part of the Dwelling Fire
policy.
It should be noted that not all states allow the ISO forms to be utilized or may require that
additional clauses are included to meet state insurance regulations.
Typically consumers can save money by purchasing their insurance directly from a
company rather than through an agent, but there are not many companies selling home
insurance directly. However, an experienced agent can provide expertise (especially
expertise with the local insurance environment) that a company may lack.

Coverage classifications
For each policy, there are typically 5 classifications of coverage. These are based on
standard Insurance Services Office or American Association of Insurance Services forms.

Section I Property Coverages

17

Coverage A Dwelling
Covers the value of the dwelling itself (not including the land). Typically, a
coinsurance clause states that as long as the dwelling is insured to 80% of actual
value, losses will be adjusted at replacement cost, up to the policy limits. This is
in place to give a buffer against inflation. HO-4 (renter's insurance) typically has
no Coverage A, although it has additional coverages for improvements.
Coverage B Other Structures
Covers other structure around the property that are not used for business, except
as a private garage. Typically limited at 10% to 20% of the Coverage A, with
additional amounts available by endorsement.
Coverage C Personal Property
Covers personal property, with limits for the theft and loss of particular classes of
items (e.g., $200 for money, banknotes, bullion, coins, medals, etc.). Typically 50
to 70% of coverage A is required for contents, which means that consumers may
pay for much more insurance than necessary. This has led to some calls for more
choice.
Coverage D Loss of Use/Additional Living Expenses
Covers expenses associated with additional living expenses (i.e. rental expenses)
and fair rental value, if part of the residence was rented, however only the rental
income for the actual rent of the space not services provided such as utilities.
Additional Coverages
Covers a variety of expenses such as debris removal, reasonable repairs, damage
to trees and shrubs for certain named perils (excluding the most common causes
of damage, wind and ice), fire department changes, removal of property, credit
card / identity theft charges, loss assessment, collapse, landlord's furnishing, and
some building additions. These vary depending upon the form.

18

Exclusions
In an open perils policy, specific exclusions will be stated in this section. These
generally include earth movement, water damage, power failure, neglect, war,
nuclear hazard, septic tank back-up expenses, intentional loss, and concurrent
causation (for HO3).] The concurrent causation exclusion excludes losses where
both a covered and an excluded loss occur. In addition, the exclusion for building
ordinance can mean that increased expenses due to local ordinances may not be
covered. A 2013 survey of Americans found that 41% believed mold was covered
although it is typically not covered if the water damage occurs over a period of
time, such as through a leaky pipe.

Section II Liability Coverages

Coverage E Personal Liability covers damages which the insured is legally
liable for and provides a legal defense at the insurer's own expense. About a third
of the losses for this coverage are from dog bites.

Causes of loss
According to the 2008 Insurance Information Institute factbook, for every $100 of
premium, in 2005 on average $16 went to fire and lightning, $30 to wind and hail, $11 to
water damage and freezing, $4 for other causes, and $2 for theft. An additional $3 went to
liability and medical payments and $9 for claims settlement expenses, and the remaining
$25 was allocated to insurer expenses. One study of fires found that most were caused by
heating incidents, although smoking was a risk factor for fatal fires.

CHAPTER 3
CLAIM PROCESS

19

Covers burglary & Housebreaking

Covers Domestic electrical appliances
Covers structure & contents of house

Call

us

on

our

24x7

Toll

Free

insurance

helpline

number

1800

2666.

Provide relevant information, which includes your policy and other details regarding your
claim. Consequently, your claim request is authenticated and is escalated to the
company's claims department.
The company's claims department validates and registers the request. The company
appoints a surveyor within 48 hours. You will need to submit all the relevant documents
to the surveyor. The surveyor submits the Final Survey Report (FSR) along with the
documents within 7 days.
On receipt of documents, the claims department processes the claim within 7 days.
Related Links
Documents Required:Call us on our 24x7 Toll Free insurance helpline number 1800 2666.

20

Provide relevant information, which includes your policy and other details regarding your
claim. Consequently, your claim request is authenticated and is escalated to the
company's claims department.
The company's claims department validates and registers the request. The company
appoints a surveyor within 48 hours.

You will need to submit all the relevant documents to the surveyor. The surveyor submits
the Final Survey Report (FSR) along with the documents within 7 days.

On receipt of documents, the claims department processes the claim within 7 days.
Related Links
Documents Required
Duly completed and signed claim form
Photocopy of policy
Copy of FIR
Final Report from police Copy of all invoices, price lists, some other documents may be
required at the time of claim settlement.

Householders' Package Claim Process

(I)

Intimation

As soon as a claim occurs, please intimate immediately to our Help line number 1800
3009(toll free), our call centre executive will assist you with the home insurance claim
procedure.
While registering the claim through above help line number, please share the below
details with our call centre executive
21

1.

Policy Number

2.

Insured name

3.

Location of loss

4.

Cause of loss and amount of loss (approx. estimation)

5.

Other relevant information like electronic breakdown, burglary details..etc

pertaining to your claim.

Call center executive will register your claim and you will receive claim intimation
number which is unique claim identification number.
Download Householder Breaking Claim Forms From BelowBurglary And Housebreaking Claim form
Electronic Equipment Claim Form
Fire Claim Form
Machinery Claim Form
Personal Accident Claim Form
(II)

SURVEYOR APPOINTMENT

The company appoints a surveyor within 2 working days, who will assess the
loss/damage, depending up the type of loss i.e. Fire/Burglary/electrical mechanical
breakdown etc.
(III)

DOCUMENT SUBMISSION

You need to submit the relevant documents as per the registered claim to the surveyor,
documents as below
1.

Claim Form with complete details (policy number, insured name..etc)

2.

Purchase Invoice of the affected subject matter

4.

Replacement invoice & Payment Proofs

5.

First Information report & Final Investigation report from Police Authorities, if
22

applicable
6.

Fire Brigade report, if applicable

7.

Service Report in case of Electronic & Mechanical breakdown claim

8.

Other supporting document as per Surveyor requirement based on case to case basis.

(IV)

CLAIM SETTLEMENT

The surveyor would submit the final report along with the relevant documents to our
Claims Authorities who would contact you if any additional information is required. The
survey fee is paid by the insurance company and you need not pay anything to the
surveyor.
Claim amount payment can be received through NEFT (National Electronic Funds
Transfer) directly into your bank account. A cancelled cheque and an ID proof like PAN
card may be submitted to the insurance company along with the claim form to avail this
facility.
On receipt of the documents, the claims department processes the claim without any
further delay.
Claim procedure for HDFC&ERGO
The event of any claim, call HDFC ERGOs toll free helpline no. 1800-2-700-700 and
register your claim at the earliest. Once you have registered your claim, a surveyor will
be appointed to estimate the loss / damage, based on the type of loss viz. fire / burglary
etc.

What perils are covered under home content insurance

23

The Policy covers these perils1) Fire and Allied Perils

2) Theft / burglary / chain snatching (for jewellery)
3) House breaking
4) Earthquake (Fire and Shock) or other convulsions of nature
5) Flood inundation / Cyclone / Storm
6) Electrical and Mechanical breakdown (includes defects in equipment,
fluctuation in electrical supply)
7) Riot, Strike, Malicious Damage, Terrorism
9) Lightning, Explosion or implosion
10 ) Subsidence and Landslide (including Rockslide)
11)Aircraft or articles dropped there from

24

12)Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation

13)Bursting and/or over flowing of water tanks, apparatus and pipes
14) Leakage from automatic sprinkler installation
15) Bush Fire
16) Missile Testing Operation
17) Impact damage - Loss of or visible physical damage or destruction caused to
the property insured due to impact by any Rail/Road vehicle or animal by direct contact
not belonging to or owned by 1) the Insured or any occupier of the premises or 2)their
employees while acting in the course of their employment

What perils are not covered under home insurance?

1) Natural wear and tear with age of appliances

25

2) Radioactive contamination or explosion

3) Loss or damage caused by repairing or dismantling of the insured apparatus
4) Loss or damage caused due to war or terrorism
5) Forest fires
6) Loss or damage due to pollution of contamination.

Reliance Householder Package Policy Coverage

Reliance home insurance Package policy gives you coverage under various heads. Check
out our new products and please do follow the simple and easy steps for premium
calculation. We promise to save a lot for you in return of your precious time spent with
us.
This policy gives you cover under various heads. Of these, cover against Fire and Allied
Perils is compulsory. You can choose any two of the other covers to complete the house
insurance policy.
1)Covers the structure of your home:

To determine the Sum Insured (SI) of your house, multiply the built up area of your home
with the current construction cost per sq. feet. Cost of land should not be included in the
SI, while, the cost of construction of compound wall should be added but Maximum Sum
Insured you can opt for is Rs. 25 Lakhs.
2)Cover against contents of your home other than jewellery:

This section covers your furniture durables, clothes, utensils, etc. - against losses arising
out of fire, lightning, explosion/implosion, aircraft damage, riots, strike, subsidence,
26

landslide, flood and inundation, earthquake, impact damage, terrorism etc. Coverage for
household goods against this risk is compulsory
3)Cover for jewellery and valuables:

Your Valuable assets like gold and silver jewellery, precious metals/stones, can be
covered against loss or damage due to accident or misfortune, while present within the
premises covered under the policy only. Sum Insure maximum of 25% of the Sum
Insured of "Fire & Allied Peril Other contents" subject to maximum of Rs. 2 lakhs.
d for Jewellery will be limited to
4)Coverage against fire:

Both terrorism and earthquake covers are inbuilt in RGICL Householder Package policy.
5)Compensation against the loss or damage to the contents of your home against burglary
and housebreaking:

You can cover your household goods against burglary, housebreaking, theft and larceny
up to 2 lacs.
6)Cover for jewellery and valuables:

Your Valuable assets like gold and silver jewellery, precious metals/stones, can be
covered against burglary, housebreaking, theft and larceny. Sum Insured will be equal to
the Sum Insured selected for the Fire & Allied Peril Jewellery.
7)Coverage for Mechanical and Electrical appliances in your home against mechanical and
electrical breakdown which are up to 10 years old:

Options to choose the contents as well as value of the contents that you would like to be
covered under different sections are:i.

For Domestic Electrical and Mechanical appliances

1.

Microwave

2.

Washing Machine

3.

Air conditioner
27

4.

Refrigerator

5.

Vacuum Cleaner

ii.

For Domestic Electronic Appliances

1.

Music System

2.

DVD Player

3. Computer-PC
Valuation of the appliances for the purpose of Sum Insured will be equal to current
Replacement value, i.e. purchase value of new appliance of the same model.
8)Coverage

for

your

personal

computer

with

accessories

such

as

printers:

This section covers electronic equipment like Computers, Music System other domestic
electronic appliances in the house against fire & allied perils, burglary, breakdown etc. Please
note that Mobile phones, iPods, Laptops and Tablet Computers are excluded from cover.
9)Cover for loss of television set:

If you have more than one television sets in your home, than consider total value of all
the television sets while selecting Sum Insured for this section. Various types of
Television Set include:

1.

LCD

2.

LED

3.

Plasma Screen

4.

Flat Screen

28

Personal Accident
This section provides compensation towards accidental Death or Permanent Total
Disablement following an accident, covering you and your family members (aged from 5
to 70 years).

Family Package covering you and your family members residing permanently with you,
will be offered on the following lines:
1. Maximum Sum Insured for self and/or spouse if earning, can be the sum insured opted
for "Fire and Allied Peril Other Content" for each person.
2. If Spouse is not earning, than Sum Insured for non-earning spouse will be 50% of the
earning member or Rs. 1 lakh, whichever is less.
Children, if aged 5 years to 25 years, then the Sum Insured for them will be 25% of the
earning member or Rs. 50,000/- whichever is less, per child.
Calculate perimum:1)Minimum of 4 sections are Compulsory
2)Equipments installed outdoors are not covered
3)Period of Insurance is annual

9 secrets of home insurance claims

You're at a disadvantage when you have major house damage or a total loss of your
home. You face a home insurance claim process that could easily stretch out for more
than a year, require reams of paperwork and leave you exhausted.
Unless you've already run the gantlet of a major home insurance claim, you don't know
what to expect. We asked Ron Reitz, the president of Quality Claims Management in San
Diego, to give us an inside look at what, many times, is an eye-opening process for
policyholders.
29

Reitz helps policyholders work through the insurance claim process and shows them how
to recoup their losses. "Most people don't learn anything about insurance until they have a
loss," Reitz says.
Umbrella insurance explained
Public adjusters work on behalf of policyholders to help people get all they're entitled to
from insurance claims. Adjusters help evaluate damage and rebuilding costs, track the
flow of insurance payments and amounts due, and work with home insurance companies
to expedite their clients' insurance claims.
Here is a look at many of the things that can take people by surprise when they have a
large home insurance claim:
1. A claim for a total loss of a house can cost less than rebuilding a damaged house :Saving on insurance
"When you start from scratch, you don't have to incorporate changes that
exist with the building, so you have a clean slate," Reitz says. Also, it's often
more costly to retrofit your old house to prevailing code than to start fresh .

2. If you have a mortgage, your insurance checks will be made out to both you and
your mortgage bank :- " Your mortgage holder is likely listed as a "loss payee" on your
home insurance policy, so payments for rebuilding are issued to both you and your lien
holder. And don't expect your mortgage holder to sign over the check to you.
Policyholders "have to endorse and send the check to the mortgage company, and it will
sit in escrow until repairs are made," Reitz says. Mortgage banks typically release the
funds back to you in three installments over the course of your reconstruction. Mortgage
companies want to be sure your property is repaired before releasing payment to you. As
a result, you may have to advance your own money for construction costs until the
mortgage company verifies the repairs.

30

3. Don't cash any insurance checks marked "full and final settlement :- In some
states, such as California, it's illegal for an insurer to issue a check like this. You don't
want tocut yourself off from any funds you'd be entitled to if you later discover that not
everything has been paid for
4. Don't sign a release on your home insurance claim

:- This

takes the home insurer off

the hook for any future payments on your claim."Insurance companies ask the insured to
do it when they think there's a problem or big dispute coming," Reitz says. The home
insurance policy does not require the insured to execute a release, so why should you
sign?
5. Don't

let your insurance company replace your Pottery Barn stuff with Wal-Mart

stuff:- The values of particular items are often disputed in home insurance claims. If
you've bought expensive items, your insurance company may say it can replace them
with very similar items from Wal-Mart or Target."We battle back and forth," Reitz says.
The insured is entitled to be paid for what he had -- not a knockoff version of it.
6. Many condo owners have no idea that they need their own home insurance policie :- They

think that the condo association's policy covers their property. However, the association's
policy covers only common areas, typically up to the walls of the condo. If you want your
own space and belongings protected, you need any HO-6 Home insurance policy
Otherwise, all your belongings, furniture, appliances and cabinets are uninsured.Without
an HO-6, you also may have no liability protection if you're sued for something that
happens within your condo, like a slip-and-fall injury.
7. If you're forced to evacuate, don't sleep at a shelter :- Your home insurance covers your

"additional living expenses" if there's a mandatory evacuation, including hotels and food
-- even additional transportation costs."Why sleep on a cot when you could go to a
hotel?" Reitz asks. "You don't realize you have that coverage until you have a loss."
8. After

a widespread disaster, insurance companies will bring in company adjusters

from out of state who aren't familiar with local costs :- Adjusters from outside your
area may not have a handle on how much electricians, plumbers or other workers charge,
31

or how much it costs to rebuild a house. Often they will rely on a software program
called Xactimate which isn't very exact if you don't account for local costs.
"The insurance company will bring in out-of-state adjusters who are probably not
licensed in the state," observes Reitz. "They're not as familiar with local building codes.
What we saw from the 2007 fires in southern califormia was that out-of-state adjusters
can't comprehend that it will cost $800,000 or $1 million to rebuild someone's house.
They can't comprehend local building values."
9. People regularly settle for less than the total cost of their damages because they are
exhausted.:- Especially near the end of a complicated claim, such as a total home loss,

homeowners just want the process to be over.

Even if your policy entitles you to "replacement cost" of your belongings, home
insurance companies will initially issue checks for your belongings' actual cash value.
Then, once you've replace the items, you must submit your receipts to get the difference
between the initial checks and what you actually paid for replacements.

"In

reality, most people don't go back and submit receipts because they're so frustrated

with the claim, they're done with it. They'll settle for less and close the claim and rebuild
for less, and the insurance company knows this," Reitz says.
Hiring a public claims adjuster can put you on an even playing field with your insurance
company. Your insurer may assign three adjusters to work on your claim: one for
"additional living expenses," one for your personal property and one for the building
portion of your claim. A public adjuster will be able to explain the process and work on
your behalf handling the countless meetings, e-mails, phone calls and paper documents
that flow for a large claim.

32

CHAPTER 4
TOP REASONS TO BUY HOME INSURANCE
A typical home insurance is an important part of any home owners life in India. Buying
a property insurance plan is a kind of assurance that your home and its insides are safe
even if there is an emergency. These plans are designed in a fashion to offer adequate
protection to homeowners against various unforeseen circumstances including flood, fire,
tremor, and quake. In the event of damage or loss incurred from perils mentioned in the
policy document, the home insurance company will compensate as per the reconstruction
cost of the house. The restoration value of a damaged house is usually measured with
respect to the area constructed before the damage and the cost of construction. This
amount is usually predetermined by the insurance company. You require getting an
estimate of rebuilding cost. This should be as per the sum allotted as insured under
property insurance plan. The insurance corporation will disburse this amount in the event
of a loss.
In case, you possess an accommodation that is vulnerable to the perils getting damaged
partially or destroyed completely due to any calamity (natural or man-made), then it is
crucial to buy home insurance with care. You should buy a plan that offers you cover for
the natural and man-made calamities your home is vulnerable to.
Since the property insurance plan covers the cost for reconstruction, you must know how
exactly the sum insured is determined for a solo accommodation in a building. You may
also wish to know if you desire to buy a property insurance plan individually or share it
with other owners in the building. The claim process may also be confusing. You should
know how exactly the insurance company will recompense. Since there is one more
claimant in the event of a building damage, you need to know all about the technique of
compensation.

33

When the building is under construction:

It is not possible to buy home insurance plan for a solo apartment when it is being
constructed because it is a part of a building structure. For a building under construction,
it needs to be covered under a plan referred to as the project insurance Usually the builder
invests in this plan.
The home owner can purchase a cover for any private cottage or a house under
construction through a builder. The cover is also valid in a private constructor is recruited
to complete the construction project. This plan can be converted into a regular one as
soon as the construction work is accomplished.
Before buying a property insurance plan:
There are a few things one must keep in mind when buying a property insurance plan.
Sum Insured
You should know about the adequacy of amount insured before buying an insurance plan.
This should be calculated on the basis compensation. Also make sure the amount reflects
the accurate value of property. Many buyers tend to decide on the sum insured equivalent
to the marketplace value. This is where they go wrong. However, an insurance company
will only pay on restoration charge. This amount is variable with charges for
construction. Usually, you can take about 10-15 per cent augment in the overall cost of
house construction. This may vary from one city to another. You may even check the
present date for construction from the municipal corporation. There are many websites
online dealing with real estate topic where you can get this information.
Cover Tenure
There are two choices when it comes to deciding on cover tenure for home insurance plan
in India. You can choose a yearly cover or a plan that gives multi-year cover. The yearly
policy will allow you to revisit adequacy of sum insured each year. If you go for a lasting
34

guiding principle, you can avail a discount that can go as higher as 50 per cent, depending
on the terms and conditions of the company and the tenure you go for.
The Benefits of Property Insurance
Knowing about the benefits of property insurance will help you extract maximum profits
from the investment made in the long run. There are many important home insurance
benefits that one should be familiar with. Some of these are mentioned below:
Investment Protection
This is one of the biggest benefits of home owner insurance plan. With this plan in hand
you can rest assured that your insurance plan is protected. You dont need to worry
about anything bad happening to your home or the financial impact of the same. The
insurance company will take care of everything.
Affordable Premium
A lot goes into buying a home. Any damage or loss due to a natural or manmade calamity
means putting the investment at risk. A home insurance plan will ensure adequate
protection at an affordable monthly premium. Property insurance is affordable as
compared to various other insurance plans available on the market. Buying a plan that
best fits into your requirements and budget plan will help you keep the property safe
without adding financial burden to you.
No Stress
Of course, buying a home owner insurance plan will cut down on a lot of stress you may
go through due to the loss and damage that may occur without prior notice or warning
signs. Having the best home owner insurance policy will help you get the best security
for your home. There is absolutely no requirement to deal with stress when you can buy
an insurance plan for your home.

35

The natural calamities covered:

1.Cyclone
2.Lightning
3.Hurricane
4.Storm
5.Flood
6.Fire
7.Typhoon
8.Tempest
9.Rockslide
10.Tornado
11.Landslide
12.Subsidence
13.Bush Fire
Man Made Calamities Covered
1.Robbery
2.Theft
3.Mutiny
4.Strike
5.Loss or destruction caused by missile testing actions
6.Damage caused due to malicious activities
7.Damage from bursting of water tanks
Destruction caused by overflow of water tanks Bursting of apparatus and/or pipes
Leakage and damage occurring from installation of automatic sprinkler
With so many benefits of buying property insurance plan, it is important that you buy one
without delay. This will help you protect the most valuable investment of your life

36

Comprehensive cover available, which covers both structure and / or contents of your
home
Coverage up to 10 years for only structure, 5 years for only contents and 5 years for
structure & content
Cover against Fire and allied perils, Burglary & Theft and Optional cover for Terrorism
and Additional expenses of rent for alternative accommodation
Cover for your home's building and compound walls
Complete Reconstruction cost of home on damage
cover Architect's, Surveyor's and Engineer's Cost
Upto 50% discount on Premium for long-term Insurance
Get cover for the content placed inside your home

37

CHAPTER 5

OPTION AVAILABLE
Home insurance frequently stops short of covering things like food thats spoiled as a
result of a power outage or a computer that's fried by a power surge. Richard Caughron, a
senior product consultant at MetLife Auto & Home, suggests giving your home insurance
policy a thorough read to find out which coverage you do have -- and which coverage
holes you may need to fill.
Here are eight types of optional coverage that you may want to weigh for your home
insurance.

1. Computer

damage
38

Tim Dodge, a spokesman for Independent Insurance Agents & Brokers of New York, a
trade group, says this option covers computer hardware, software and related
components. A standard home insurance policy won't cover damage if, say, your
computer is damaged by a power surge or spilled coffee. But an add-on to your policy
will cover that type of damage. This extra layer of coverage should cost less than $100 a
year, Dodge says.
You also can buy this type of coverage separately. It's sold by companies like
ElectronicWarranty.com, SquareTrade.com and SafeWare.com. Prices vary.

2. ID theft
Insurers like MetLife and Liberty Mutual sell identity theft protection as a supplement to
traditional home insurance. The annual cost, according to Dodge, is about $25. The
deductible runs about $250.
What does this coverage offer? If, for instance, a cybercriminal steals your credit card
numbers and makes thousands of dollars in unauthorized purchases, this coverage can
help you pay to restore your "good name and credit history," Caughron says.
A standard limit for ID theft coverage is $15,000. Expenses that fall under that umbrella
include replacement of income you lost because you had to take time off work to right the
wrong. This coverage won't cover any unauthorized purchases, though; that's typically
addressed by your credit card issuer.

3. Spoiled food
If fresh and frozen food goes bad because your refrigerator stops running during a power
outage or simply goes on the fritz, optional "refrigerated contents" coverage can help you
recover from this kitchen calamity. However, Dodge says, this coverage typically
provides a small amount of money -- $500 to $1,500. And before collecting any money,
you'd have to pay a deductible of about $100, Dodge says.

39

4. Content replacement
If you have coverage of $50,000 for your furniture and other household belongings but it
would cost $75,000 to replace items damaged or destroyed in a fire or another covered
disaster, youd receive no more than $50,000. Standard home insurance policies
reimburse you for the "actual" or depreciated cash value of your belongings. So if you
forked over $1,000 a year ago for your flat-screen TV, it might be worth just $750 now,
Caughron says, "and thats all youd get as long as your claim doesnt exceed the policy
amount."With "replacement cost" coverage, youd be given enough money to fully
replace your lost items, Caughron says. The cost for this coverage varies widely; it's
based largely on the amount of coverage you want.

5. Personal injury
Personal injury coverage pays for legal bills in case youre sued for slander, libel or other
similar issues; it doesn't refer to physical injuries. Dodge says he bought this coverage for
himself for less than $20 a year after Long Island teenager sued Facebook and four of her
former high school classmates in 2009. The $3 million lawsuit claimed the ex-classmates
disparaged her on the social media site.The case against Facebook was thrown out, but
the case against the teens was not," Dodge says. "Unless their parents had personal injury
coverage, they had to pay for their lawyers and any settlement out of pocket."This extra
coverage may cost as little as $20 a year, Dodge says. Plus, there's no deductible.
6.

Inflation protection

For an extra cost, an "inflation guard" increases the amount of your home insurance to
keep up with inflation so that you can maintain adequate coverage to replace your home
in case of a disaster. "It automatically adjusts the coverage limits when you renew your
policy to reflect current construction costs in your area," says Loretta Worters, a
spokeswoman for the nonprofit insurance information institute.

40

7. Code upgrades
Caughron says "ordinance or law is a type of coverage that "is not well understood by
the general public."Standard insurance normally won't pay for the extra costs associated
with making sure your home meets new building codes or ordinances when it needs to be
fixed. So if your community has imposed new rules about roofing or plumbing since your
home was built, you'd have to pay for related upgrades out of your own pocket.That's
where "ordinance or law" coverage can come in handy. If your home is insured for
$200,000 and you tack on this extra coverage, your policy generally would cover code or
ordinance upgrades up to 10 percent of the insured amount, or $20,000. Higher coverage
amounts are available; MetLife recommends "ordinance or law" coverage totaling at least
30 percent of the insured amount.

8. Water or sewage backups

One of a homeowner's biggest fears is coping with a sewer or drain backup or a nonpumping sump pump. You can ease those fears with what Caughron calls "one of the
most important" coverage options available to homeowners.Home insurers like Allstate
and MetLife sell coverage to pay for repairing backup- or pump-related damage;
coverage amounts range from $5,000 to $250,000. Of course, you'd have to pay a
deductible if you file a claim."Higher coverage amounts are advisable if you have
valuables in the area around drains and sump pumps on the lowest floor of the house,
Caughron says.

41

CHAPTER 6
Types of House Insurance

42

There are several different types of house insurance and options within those insurance
policies. House insurance typically covers the structure, contents and liability for the
house and owners. Every type of house insurance covers different aspects of the home
and ranging perils, or risks. Also, each insurance company might offer different options
within each policy type.

House Insurance

You can get three different types of house insurance. There is basic, broad or
special coverage, also known as HO-1, HO-2 and HO-3. Basic and broad coverage are
considered named peril coverage, because if it is not named then it is not covered. Basic
coverage only covers 11 types on losses, including fire, lightening, windstorm or hail,
smoke, explosion, vandalism, impact of aircraft or vehicles, riot, sinkhole, sprinkler
leakage and volcanic eruption. Broad coverage covers those eleven risk as well as
accidental water damage, falling objects and weight of ice, sleet or snow. Special
coverage is also known as all peril coverage, but this name can be misleading. Special
coverage means everything is covered unless it is specifically excluded. This is why these
policies have a long list of exclusions.
House insurance covers the building, contents and your liability. There are many options
to choose from. Insurance agents can help review the policy, options, endorsements and
exclusions to find the right balance of coverage and price.

Condo Insurance

Condo insurance covers a condominium for items that are not covered by the
association master policy. Every association policy is different; you can learn what it
covers by reviewing the policy and the association bylaws. Condo policies are very
flexible because of the differences in association master policies. You are able to choose
how much building coverage and contents coverage you need. Some associations require
you cover all of the fixtures, some require you cover from the studs in and some don't
require you cover any of the building.

Rental House Insurance

43

If you own a house that you rent out to other people then a traditional house insurance
policy is not the right choice. It will leave you exposed to the additional liability that a
tenant brings, and you might be declined coverage if you have a claim. A rental house
requires a business policy, because you are earning income from it. These policies include
additional coverage, like loss of rent, and are built to handle the liability exposure of a
tenant as opposed to the owner living there. Also, these policies remove a large portion of
the personal property coverage, because the tenant should cover their own contents

Types of Coverage in a Homeowners Insurance Policy

44

Coverage

Description

Type
Coverage

A:

Damage to House

Covers damage to the house. The face amount of the policy

(for example $100,000) is the most you will receive if your
house is totally destroyed.

Coverage

B:

Other Structures
Coverage

Covers damage to other structures or buildings, such as a

detached garage, work shed, or fencing.

C: Covers damage to, or loss of personal property. Personal property

Personal Property includes household contents and other personal belongings used,
owned or worn by you and your family.
Coverage

D: Covers additional living expenses when incurred. This means that

Additional Living the policy covers the necessary living expenses up to the stated
Expense

limit, incurred by the insured to continue, as nearly as possible, the

normal standard of living when the house cannot be occupied due
to a covered loss.

Coverage

E: Covers personal liability. This coverage protects you against

Comprehensive

claims arising from accidents to others on property that you own or

Personal Liability rent. With a few exceptions, such as auto or boating accidents, it is
an all purpose liability policy that follows you wherever you go.
Coverage

F: Covers medical expenses. Coverage is limited to an amount per

Medical Expense

person and per accident for injuries occurring on your premises to

persons other than an insured, or elsewhere, if caused by you, a
member of your family, or your pets. An important feature of this
coverage is that payment is made regardless of legal liability.

The Complete Guide to Home Insurance:-

45

Homeowners Insurance 101: Are You Protected?

A homeowners insurance policy provides homeowners with financial compensation

should they suffer losses related to their home. It would pay for the structure and contents
of your home if they were damaged or destroyed, as well as legal costs if someone is
injured in your home or on your property.
Every homeowner needs homeowners insurance. Here's what you need to know about it:
What does homeowners insurance cover?

Homeowners policies vary on what and how much they cover, but typically they'll cover
all or part of your financial losses related to:
The home itself, including the structure and its plumbing, electrical wiring and central air
and heat systems.
Other structures on your property such as sheds and fences.
The possessions in your home, such as electronics, appliances and clothes, even when
they arent located on your property.
loss of use, such as paying for a hotel room while your home is getting fixed.
personal liability (financial losses should someone get hurt on your property and sue
you).
Medical payments for people who get hurt on your property
What type of policy should you get?

There are a number of different kinds of policies -- ranging from an HO-1 to an HO-8
policy -- but most owners of single-family homes should opt for an HO-3 policy. This
policy is fairly comprehensive, providing liability coverage and covering most "perils" to
your home such as fire, wind and theft (but typically excluding flood, earthquake, war
and nuclear accident). (The HO-1 and HO-2 policies cover less than the HO-3; the HO-4
is for tenants and renters.)
How much homeowners insurance do you need?

There are a number of things to consider when figuring out the details of your policy.
First, ideally you will want to purchase enough insurance to cover 100 percent of the cost
of rebuilding your home should it get damaged or destroyed. You can opt for an "actual
46

cash value" policy option -- this pays you what the property was worth at the time it was
destroyed, minus depreciation -- or something more comprehensive such as a
"replacement cost" option, which does not factor in depreciation, or an "extended value"
option, which will pay you up to 20-30 percent over your policy limit (so a $100,000
policy might have $120,000 - $130,000 worth of coverage; this is designed to protect you
against things such as sudden hikes in construction costs due to storm damage). Go for
the more comprehensive option so you can cover 100 percent of the cost to rebuild your
home.
Next, consider the contents of your home. Make an inventory of your home's contents
(the Insurance Information Institute's website can help you do this) to determine how
much insurance you'll want to cover your home's contents. Again, rather than opting for
an "actual cash value" option, go for a more comprehensive option, so you can afford to
replace everything you own.
Make sure your homeowners policy has enough liability coverage to cover the total dollar
amount of your financial assets, like your home, retirement accounts, investments, and
anything else worth money.
You may also need to add onto the policy. Most standard homeowners policies do not
protect you in the event of floods and earthquakes, so if you live in an area prone to these
types of events, you may want to purchase extra insurance. If you have many valuable
items in your home such as fine jewelry or expensive artwork, you may need to add a socalled personal property provision to your policy, which will make sure you are fully
reimbursed for these if they are destroyed, damaged or stolen.
When should you buy homeowners insurance?

Most of the time, your mortgage lender will require you to purchase homeowners
insurance before it will sign off on your loan (this protects the lender's interest in your
home). But even if you don't have a mortgage, it's a good idea to have homeowners
insurance to protect your investment and provide liability protection. Review your
coverage each year to make sure you still have enough coverage to meet your needs;
remember, you can add on to your homeowners policy at any time.
How do you shop for homeowners insurance?
47

Get quotes from at least four companies that offer homeowners insurance such as State
Farm, USAA, Nationwide Mutual, Allstate and Liberty Mutual. You can also use sites
such as insweb.com to get quotes from a variety of insurers, and your state insurance
department. Finally, before you buy homeowners insurance, check out the insurance
company's financial health at ambest.com or standardandpoor.com.

How much does homeowners insurance typically cost?

In very broad terms, expect to pay about $35 per month for every $100,000 of home
value. People in risky areas ( areas prone to storms, crime and other perils) can expect to
pay more, as can people who add extra coverage to their policies (for things such as
floods or personal property). To save money on homeowners insurance, see if you can get
a discount for holding multiple policies -- like your home and car insurance policies -with one company. You should also call the company to ask how you can lower your rates
(by installing a security system, for example), and consider raising your deductible (if
you have the savings to pay the higher deductible, if needed). The estimate for cost is
normally extraordinarily cheap.
What is a home insurance binder?

A homeowners insurance binder is basically a temporary homeowners insurance policy. It

takes awhile to issue a permanent policy, so this policy may be issued in the interim until
a formal policy is accepted or denied. Getting this policy can help facilitate closing on a
home (because lenders require insurance).

How to Calculate Home Insurance Rebuilding Costs:-

48

Most homeowners insurance policies will pay to rebuild your home if it is totally
destroyed, but only if you insure it for at least 80 percent of that cost. First, you'll need to
know how much it would cost to rebuild your home. An insurance agent will figure this
calculation for you using several factors and programs, but you can create an estimate on
your own of a home's rebuilding cost.

Instructions
1.

Rebuilding Cost
Research rebuilding costs instead of home sale costs. Many consumers are astounded
when they buy a home for $175,000 and their insurance agent wants to insure it for
$300,000 or more. Replacement cost is higher than the cost to buy another similar home
on the market because to replace a home, contractors must remove debris from a claim
(fire, storm) then rebuild a new home that matches the size and style of the home that was
damaged.
Write down the details of your home. Record the overall size of your home (square feet),
number of stories, quality and number of bathrooms and kitchens, and other features such as
a deck or attached garage. The county auditor or similar authority may have specifics about
your home, such as the square footage, listed online.

49

Contact contractors for estimates. Bear in mind that insurance rebuilding costs are based
upon material and labor costs as well as debris removal. New construction in your
neighbourhood may be running $90 to $100 per square foot, but if you add debris removal
costs from fire, water or wind damage, the cost will rise. Many contractors specialize in
insurance work and can help with this calculation. Remember that when talking replacement
cost, you are considering replacing the exact features of your home, so older homes with 9foot ceilings, thick wood trim and large windows may cost more to replace.
Assess your location. Insurance companies pay vendors to develop speciality programs that
tell them where rebuilding costs are in a given region at a given time, but you can get an idea
on your own by evaluating the local economy. Professional cost models differentiate
rebuilding costs by zip code. Consider the demand for construction labor and associated fees
in your community. Average rebuild prices for a mid-century ranch in suburban Ohio may be
$75 to $90 a square foot, while the cost to rebuild a condo in Manhattan may be $300 a
square foot.

2.Tips & Warnings

He cost to rebuild a home is not the same as the cost to buy an existing home on the
market. Don't mistake new home prices for the cost to rebuild.
Check with your agent every two to three years to request a new rebuilding cost
estimate.
Older homes generally cost more to rebuild than newer homes due to their custom
features, but you can use a "functional replacement cost" endorsement on your
homeowners policy to insure your older home only for the cost to repair or replace it
with a home that contains newer features and contemporary construction.
The "replacement cost" provisions of most policies are usually only triggered if you
have insured your home for at least 80 percent of the cost to rebuild it, so this
calculation is very important.
Insurance companies have a tendency to be very rigid with their replacement cost
estimates, but remember that you know your home best. If the estimate from your
insurance agent doesn't sound right, ask questions and be sure to point out all the
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unique characteristics of your home. You do have a say in how much your home is
insured for.

3.The Types Of Home Insurance Policies

There are several basic types of home insurance that offer different levels of
coverage. Each type of home insurance policy provides coverage for certain perils. A
peril is the particular event that causes the damage or destruction of the home. Some
types of home insurance policies will name the perils specifically, and others will
exclude them. what you need out of home insurance depends on your home and what
you want to cover. Read below to understand.

HO-1 is very basic coverage. It only covers damage to the dwelling as a result of 10
listed perils, and does not include homeowners personal liability insurance. Therefore, if
you're sued by someone who slips on your property, your insurance company won't
defend you in court or pay the plaintiff if you are found to be at fault. If you have a
mortgage, you would not buy this type of insurance as it would not provide you adequate
protection to insure your home. The ten perils the HO-1 Home Insurance Policy will
protect your home and belongings from are:
Fire or Lightning
Wind storm or Hail
Explosion
Riot or Civil Commotion
Aircraft
Vehicles (unless caused by the insured)
Smoke

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Vandalism or Malicious Mischief

Theft (limit of liability on HO-1 is usually $1,000)
Volcanic Eruption
HO-2 is sometimes called the broad coverage policy. The HO-2 is similar to the HO-3
because it covers the dwelling (house) and other structures (detached garage, fence), but
it insures against only specifically named perils. The policy includes more perils than
HO-1 and offers homeowners personal liability coverage. The sixteen perils that your
home and belongings are protected from with the HO-2 Home Insurance Policy are:
Fire or Lightning
Wind storm or Hail
Explosion
Riot or Civil Commotion
Aircraft
Vehicles
Smoke
Vandalism or Malicious Mischief
Theft
Volcanic Eruption
Falling Objects
Weight of Ice, Snow, or Sleet
Accidental Discharge or Overflow of Water or Stream
Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging

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Freezing
Sudden & Accidental Damage from Artificially Generated Electrical Current.
HO-3 policy is called the special form policy. It insures your home and detached
structures against loss or damage from any peril except for those specifically excluded in
the policy. This is the policy most homeowners purchase. It is important for you to read
your policy carefully to see what is excludedyou may want to cover exclusions with
special home insurance riders. The contents of your home are only covered against listed
perils, so be sure to read that list in your policy. This policy also includes liability
coverage. If the damage to your home is not caused by something on the exclusion list,
then you have coverage. Exclusion List for Your HO-3 policy:
Earth Movement (earthquake coverage can be added by endorsement)
Ordinance or Law (some coverage may be provided in your policy)
Water Damage (Sudden & Accidental Water Damage is automatically included; others
can be endorsed onto the policy)
Power Failure
Neglect
War
Nuclear Hazard
Intentional Loss
Government Action
Collapse (some coverage may be provided in your policy)
Theft to a Dwelling Under Construction
Vandalism or Malicious Mischief (only if vacant more than sixty days)
Mold, Fungus, or Wet Rot (some coverage may be provided in your policy)
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Wear & Tear, Deterioration

Mechanical Breakdown
Smog, Rust & Corrosion
Smoke from Agricultural Smudging & Industrial Operations
Discharge, Dispersal, Seepage of Pollutants
Settling, Shrinking, Bulging, or Expanding
Birds, Vermin, Rodents, Insects
Animals Owned by Insured.

HO-4 This is the only insurance policy designed for renters. It is however, part of the
homeowner's policy group. It is known as the tenant homeowner's policy as well as the
Contents Broad Form policy, and it covers only the contents of the home and personal
liability for the insured tenant. The policy also covers additional living expenses if a
renter is displaced due to a covered loss, medical payments to others, as well as the
liability protection.
HO-5 is one of the best home insurance policies available in the United States. It
provides excellent coverage for the dwelling itself and for thecontents of your home. The
HO-5 insurance policy is an open perils policy, which means it only lists the perils the
policy does not cover. If your home and/or personal property are damaged by something
that is not on the exclusion list, then you have insurance coverage. This policy provides
the most extensive coverage that is offered. It is one of the most elite home insurance
policies available to homeowners. Exclusion List for Your Home & Contents:
Earth Movement (earthquake coverage can be added by endorsement)
Ordinance or Law (some coverage may be provided in your policy)

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Water Damage (Sudden & Accidental Water Damage is automatically included; others
can be endorsed onto the policy)
Power Failure
Neglect
War
Nuclear Hazard
Intentional Loss
Government Action
Collapse (some coverage may be provided in your policy)
Theft to a Dwelling Under Construction
Vandalism or Malicious Mischief (only if vacant more than sixty days)
Mold, Fungus, or Wet Rot (some coverage may be provided in your policy)
Wear & Tear, Deterioration
Mechanical Breakdown
Smog, Rust & Corrosion
Smoke from Agricultural Smudging & Industrial Operations
Discharge, Dispersal, Seepage of Pollutants
Settling, Shrinking, Bulging, or Expanding
Birds, Vermin, Rodents, Insects
Animals Owned by Insured.

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CHAPTER 7
MONOPOLY PLAYERS
Top home insurance companies of India
ICICI Lombard General Insurance Co. Ltd.
ICICI LOMBARD is India's number one general insurance company. You can assure
your peace of mind

if you get your house insured by ICICI LOMBARD. They provide

insurance of home as well as household goods. They offer simple and fast documentation
and also digital signed documents through an online interface

IFFCO Tokyo General Insurance Co. Ltd.

iffco tokia is one of the prominent companies iffco tokyo enture between Indian Farmers
Fertilizer Co-operative (IFFCO) and its associates and Tokio Marine and Nichido Fire
group, the largest listed insurance company in Japan. IffcoTokio is the only insurance
company in the country to have 100% owned distribution channel to service its retail
customers. It has presence across the country and has one of the largest distribution
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networks in the country as well. The company provides insurance policies to cover
various commercial and individual risks. IffcoTokio provides home insurance, motor
insurance, travel insurance, personal insurance in addition to health insurance plan.
IffcoTokio health insurance claims are very easy to make and they are settled very
quickly India. They are one of the top most companies in insurance. They offer 40 unique
customized policies. They are of great help to those people who leack knowledge and
information about quality insurance products products.

National Insurance Co. Ltd

National Insurance Company Ltd is the oldest existing insurance company in India.
Under its home insurance policy it insures your home and also its contents. It covers a
number of risks under single police.
This is a package policy specially designed to meet the insurance requirements of a
householder by combining under a single policy, a number of our standard policies
usually taken by householders. Discount in premium is offered depending upon the
number of sections of the policy, opted for, by the proposer.
Scope
The policy comprises of 10 sections as given here under
Section I - Fire & Allied Perils
A) Coverage for building
B) Covers contents of the dwelling belonging to the proposer and his/her family members
permanently residing with him/her.

Section II - Burglary & House Breaking including larceny and theft.

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Covers contents of the dwelling against loss due to burglary, house breaking, larceny or
theft.
Section III - All Risks (Jewellery& Valuables)
Covers loss or damage to your jewellery and valuables by accident or misfortune whilst
kept, worn or carried anywhere in India subject to the value declared in the schedule.
Section IV - Plate Glass
Loss or damage to fixed plate glass in the insured premises by accidental breakage
subject to limit of sum insured
Section V - Breakdown of Domestic appliances
Covers domestic appliances against unforeseen and sudden physical damage due to
mechanical or electrical breakdown.
Section VI - T.V. Set including VCP/VCR (ALL RISKS)
Covers loss or damage to T.V.Set including VCP/VCR by fire and allied perils, burglary,
house breaking or theft, breakage due to accidental external means, mechanical or
electrical breakdown. Any legal liability arising out of bodily injury or accidental death of
any person other than insured's family members or employee as also damage to property
not belonging to or in the custody of insured , caused by use of the T.V. Set is also
covered upto a limit of Rs.25,000/-.

Section VII - Pedal Cycles (All Risks)

Covers loss or damage to pedal cycles by :1. Fire & allied perils
2.Burglary, housebreaking, theft
3. Accidental external means

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4. Third party personal injury or Third party property damage for Rs.10,000/Section VIII - Baggage Insurance
Covers loss or damage to insured's accompanied baggage by accident or misfortune
whilst the insured is traveling on tour or holiday anywhere in India.
Section IX - Personal Accident
Covers Death or bodily injury by accidental, violent, external and visible means to the
insured person named in the schedule and subject to limits specified therein.
Section X - Public Liability
Covers Insureds legal liability for bodily injury or loss of or damage to property of third
party limited to amount specified in the schedule and workmens compensation liability
to domestic servants engaged in insured's premises.
It is compulsory to opt for Section IB of the policy. A minimum of three sections
including Section IB has to be taken for issuance of this policy

New India assurance co

Premium payable in Rupees and Claims settled abroad in foreign Currency. Policy
available for frequent corporate travelers
One policy covering destruction or damage to insured property.
This is a package policy specially designed to meet the insurance requirements of a
householder.
This policy covers all types of vehicles plying on public roads. Two types of covers are
available.
Specially designed for small shopkeepers. It is a single policy combining the various
insurance requirements.

Tata AIG Life Insurance Co. Ltd.

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Tata AIG is India's leading insurance company providing both Life and General
Insurance. They provide home insurance at a very nominal rate.

United India Insurance Co. Ltd

United India has been in the forefront of designing and implementing complex covers to
large customers, as in cases of ONGC Ltd , GMR- Hyderabad International Airport Ltd,
Mumbai International Airport Ltd Tirumala-TirupatiDevasthanam etc. We have been also
the pioneer in taking Insurance to rural masses with large level implementation of
Universal

Health

Insurance

Programme

of

Government

of

India

&VijayaRajiJananiKalyanYojana ( covering 45 lakhs women in the state of Madhya

Pradesh) , Tsunami Jan BimaYojana (in 4 states covering 4.59 lakhs of families) ,
National Livestock Insurance and many such schemes.

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CHAPTER 8
HOME WARRANTY VS.HOME INSURANCE
You may ask yourself is there a difference between a home warranty and home insurance.
The answer is yes. There is a difference, and it is a big difference. Home insurance is
required for your home, while a home warranty isn't required and isn't always necessary.
What Is a Home Warranty?
A home warranty offers protection for your major appliances, plumbing, and electrical
wiring. These warranties will cover the cost of repairing or replacing major household
essentials if they break down.
How a Home Warranty Works?
A warranty company already has contracts with different service venders, so when a
covered item breaks down you will need to contact your warranty company. They will
then contact a service repairman to come to your home and repair the item. The
repairman will fix the item or recommend that it be replaced. The service repairman will
bill your warranty company directly.
What a Home Warranty Costs?
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A home warranty can range in price from as little as $200 to as much as $700 a year,
depending on the amount of coverage you receive. You will also have to pay a service fee
anytime that a repairman is at your home. This fee generally ranges from $25 to $100.

Do You Need a Home Warranty?

Home warranties are becoming popular in these hard economic times, but before you
purchase one make sure it is the right decision for you. If you are trying to sell your
house, a home warranty will be a good investment. Many buyers like the protection that
is offered with a warranty and may purchase your home just because they have that
security for one year. If you have an older home and your appliances are getting older, a
warranty may good idea for you.
How to Choose a Home Warranty?
When you are thinking of investing in a home warranty, be sure to shop around. When
you are getting price quotes, ask to look over a sample policy. Remember to read the
policy in its entirety, including the fine print
What Is Home Insurance?
When you purchase a home you are required, by your lender, to carry insurance on
your home. A home insurance policy has two basic areas of protection: it covers your
home in the event that it is damaged and offers you liability protection from lawsuits.
What Home Insurance Covers?
Home insurance offers you protection for damage to your home. This damage could be
from a fire, theft, vandalism, or certain natural disasters. Not only does it cover your
house but it also covers your personal items and gives you liability protection. Liability
insurance will protect you from lawsuits in the event that someone is injured on your
property. Home insurance will only insure your personal items if they are stolen or ruined
in a disaster, it will not repair or replace them if they are broken.

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What Home Insurance Costs?

The price of home insurance varies greatly. Many things are taken into consideration,
including the value of your home and its contents, the loan amount on your home, the
location of your home, and the amount of your deductable.
How to Choose Home Insurance?
As with any type of insurance, it is always a good idea to shop around and compare
prices and benefits. A great place to start is with your current car insurance carrier, since
most insurance companies will offer you a multi -policy discount. Make sure you read the
policy before writing a check and ask any questions you may have.

The Best Home Insurance for 2014

Updated: February 21, 2014
After evaluating both national and local insurance companies, Amice Mutual stands out
as the best home insurance company on the market today. To confirm if Amice home
insurance is available in your area, start by getting a free online quote
Amice earns the distinction of best home insurance company by performing
exceptionally well in three critical home insurance categories:
Price
Claim
Coverage

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Although amice is the best overall provider, companies like state form liberty mutual,
and allstate also rank well in these areas and are worth considering.
There are many reputable national carriers offering similar types of coverage. To find the
ideal option for you, the best way to start is by getting an online quote for your area and
comparing rates.
PRICE
If youre trying to find the cheapest homeowners insurance policy, taking advantage of
online quote tools is a must. Online quote tools significantly reduce the amount of time
and effort it takes to receive and compare homeowners insurance quotes from multiple
carriers.
Strategies for Getting Home Insurance Quotes Online
If youre less certain about which provider youre interested in, you can get quotes using
the tool below. Enter your zip code in the box and click Get Quotes and youll be
presented with a list of 3-5 of the best national and local home insurance providers in
your area. You can research policies from each provider and determine which is the best
fit for your home and your budget.
Utilize the online quote tools found directly on the websites of top insurance companies
like Amica, State Farm, and Liberty Mutual. This strategy is most appropriate if youve
already narrowed your search down to three or four insurance companies.
To give you an idea of what this looks like, I went to four of the best insurance providers
and got a quote for a home in a Chicago suburb. These are the monthly quotes I received:
Amica: $75.33
State Farm: $117.75
Liberty Mutual: $129
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Farmers: $150
As you can see, Amica is considerably cheaper than the next provider in this scenario.
Each homeowners insurance company asks for slightly different information, but as I
went through each online tool I used the same profile with the following characteristics:
Location: Address located in a Chicago suburb
Home Value: $315,000
Deductible: $1,000
Size: 1,900 square feet
Applicant Age: 40
Home Type: 1 story
Roof Type: Asphalt shingle
Payment Terms: Monthly The great thing about online quote tools is that you determine
the exact type of coverage you want, select the level of your deductible, and choose the
payment terms. It might take a little extra legwork, but online quote tools really do put
the power in your hands to find the cheapest policy.
Many online tools, like the one provided by liberty mutual, enable you to modify the
coverage levels you select, so you can clearly see how changing one component directly
impacts the price of your policy. (For example, you could enter a low value for your
deductible, see what your rates look like, then enter a high value and see how your rates
changed.)

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Homeowners Insurance Discounts

All of the best homeowners insurance companies offer a variety of discounts. If you fail
to take advantage of these discounts, youre just leaving money on the table. To give you
one example, if you took advantage of a multi-policy discount and bundled the same state
form home insurance policy quoted above with an auto insurance policy, your monthly
rate would drop from $117.75 to $76.50. Thats almost $500 in savings per year!

CLAIM
The circumstances that surround filing a home insurance claim have the potential to make
the whole ordeal quite stressful. When your home has been damaged, the last thing you
want to do is go to battle with an insurance company that youve been making payments
to for the last several years.
Based on data from studies conducted by J.d.power &associates and consumer report org
when it comes to filing a claim there is a clear distinction between the different insurance
companies. The company that excelled in both studies was amice mutual Amice is one of
only two companies to receive above average ratings in six different categories in the J.D.
Power 2013 U.S. Household Insurance and Bundling Study. These six categories measure
factors like Overall Satisfaction, Price, Policy Offerings, Claims, and other characteristics
fundamental to quality homeowners insurance.
Amica also ranked at the top of Consumer Reports homeowner insurance rating. This
study measures existing customers satisfaction with agent availability, the dollar estimate
received when damages occur, and timely payment by the insurer.
In the event that you do need to file a claim, its comforting to know you can easily
contact your agent, be treated fairly, and get the money you need to make repairs quickly.
Ranking exceptionally well in separate studies conducted by two of the most reputable
companies is a good indicator that Amica is doing something right.
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(As a side note, the other insurance provider that ranked well in both studies is USAA
However, a major drawback of USAA is that membership is limited to those with military
affiliation. If you, your spouse, or one of your parents have served in the military, USAA
is definitely worth looking into.)
COVERAGE
The main reason you buy an insurance policy is for the coverage it provides. State farm
stands out for offering excellent coverage options, some of which include:
Dwelling Coverage: The part of your policy that helps pay to repair or rebuild your
home if damage is the result of a covered loss. Critical home components like plumbing,
electrical wiring, or your HVAC system fall into this category.
Liability Insurance: Helps protect your assets and cover costs associated with a lawsuit
when you or a family member are responsible for injuring another person, or if someone
is injured on your property. (For example, if your dog bites your neighbor.) It also
provides coverage if you or a family member causes damage to another persons property.
$100,000 is a good benchmark for liability coverage, but this will vary depending on the
size of your home and the assets you need to protect.
Other Structures: Covers the cost of repairing (or rebuilding) detached garages, sheds,
and other similar structures.
Personal Property Coverage: Covers your clothing, electronics, furniture, and other
personal property that is damaged or destroyed by a cause that is covered by your
insurance. Most top insurance companies provide checklists, personal property
calculators, or other resources to help you document your belongings. For example,
liberty mutual provides a mobile app you can upload pictures, receipts, and more.
Loss of use: If your home is damaged to a degree that you have to temporarily move out
while it is being repaired, loss of use will help pay your housing and living expenses.

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Guest Medical Coverage: Provides coverage for medical bills and related expenses
when someone is injured on your property, but they do not want to sue you. $1,000 per
person is a common level of coverage, though some homeowners choose to take out an
extension for added protection.
Additional Protection
In addition to the basic coverage options listed above, the policies of each major
company include other types of coverage to complement the basic options outlined
above. For example, all state also offers optional coverage for identity theft restoration,
scheduled personal property, water backup, and more.
Most home policies cover damage from wind and fire, but natural disasters like floods or
earthquakes almost always have to be added on as an additional policy option. If you live
in areas particularly susceptible to these threats, you should look into the catastrophic
coverage options offered by the provider before making a purchase.

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CONCLUSION

Beginning with Hurricane Hugo in 1989, catastrophes have caused large underwriting
losses for homeowners insurance. Much larger catastrophes and resulting insured losses
are possible. Policymakers in California and Florida have tried to address the need for
insurance to cover a moderately sized catastrophe, but a solution to the problem of a large
catastrophe (or a combination of several moderately sized catastrophes) does not yet
exist. Until society solves this problem and creates the necessary financial mechanisms,
homeowners insurers will remain in a precarious situation, and insurance availability may
remain a problem in catastrophe-prone areas.

But catastrophes are not the entire problem. Competition and customer demand for more
coverage have generated an ongoing string of enhancements, resulting in prices
constantly playing "catch-up" with the forces driving costs. Future profitability for
homeowners insurance will hinge on insurers' ability to reflect the true cost of their
evolving coverages in the prices of their products.

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WIBILOGRAPHY

http://www.icicilombard.com
http://www.royalsundaram.in
http://www.en.wikipedia.org/wiki home insurance
http://tataaig insurance in home insurance

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