EXECUTIVE SUMMARY:  House and its belongings are the most important assets and we take utmost care to protect them, yet there is always a risk of damage or theft. Householder’s Policy is the solution through which one can transfer the risk by insuring the structure of the house and its belongings. Be it Electronics, Jewellery, furniture or the structure the policy provide cover in case of damage through fire or earthquake and also in case of burglary. This article explains the basic elements associated with the policy which can help you in making buying decision.             
 
Home is a place or an environment offering affection and security to a person. In order to ensure complete security of such place householders policy is necessary. It provides cover both to a building and its contents. In other words, it is a packaged policy which provides variety of covers that are required for a common householder.

How does this work?
While buying this policy property valuation is done by multiplying the built up area of the property with the cost of construction per square feet. Also one has to declare household contents at their market value and if electrical items are included then those are of replacement value. Even with a rented property as well, one can cover the contents of the house against fire and allied perils, burglary, electrical or mechanical breakdown of appliances, etc. Even the structure of the building can be covered with an additional policy. It is important here for one to check with the insurer if there are some hidden clauses or not.

​Some of the common features of the standard householder’s policy:

• Dwelling coverage: Home is one of the most valuable assets. There should be enough dwelling coverage on the policy to rebuild to its original state if destroyed by fire or other covered cause of loss. The cost to rebuild the place back to its original state could be much higher than one can think. The factors that impact the cost to rebuild are –  Total living area (square footage of home), number of kitchens and washrooms and the quality of materials, Exterior wall construction (Frame, brick), special features (fireplaces, skylights), etc.

• Personal Property Coverage: Damage of personal property is a doubtless answer along with the damage of one’s home. If possible it is better to get personal property coverage where the policy compensates for these items in the event of a covered loss.  These personal property items may include jewellery, silverware, gold ware, watches, precious stones, Money or related property, coins etc.

• Loss of use coverage: If one’s home is damaged, then one has to stay away until the repairs are done. The policy also provides a coverage for incurring the expenses of staying outside, if at all a covered event makes one’s house temporarily uninhabitable while its being repaired or rebuilt.

• Liability insurance: Liability insurance is about financial protection for one and for one’s family. The personal liability coverage within the homeowner’s policy provides coverage for bodily injury and property damage sustained by others for which one or one’s family may be held responsible legally. For example, if someone falls down the stairs one may be held responsible for the damage caused. Under these circumstances, insurance company helps in defending, at the same time paying for the damages of an injured person up to a certain limit. Liability insurance also includes medical payments to others coverage. The policy also provides for the payments of necessary medical expenses for the guests who are accidentally injured on one’s own property.

What kinds of cover does the Householder Insurance Policy provide?
This type of policy split into ten sections covering a number of contingencies. The Sections are as follows:

How many sections one can choose?
Minimum of 3 sections are necessarily to be taken out of which insurance against loss due to fire / allied perils is a compulsory option, rest one can choose section according to personal requirement. If one has a premium laptop, Section VI also becomes important to take. If one has substantial amount of jewellery then one can chose Section III which also provides cover for jewellery against all risks, i.e. jewellery robbed while one is travelling or when it is lying in the locker.

Points to keep in mind while buying insurance –

• Generally the proposer gets discount on choosing more than 4 sections and above on premium. This excludes Fire and Allied Perils section. Also discount varies between companies to company.
• One has the option of taking Standard fire and Special Perils policy if one wants to insure the property while it is under construction. Once the construction is complete, one may opt for householder policy to cover one’s content of the house against fore and allied perils, burglary or house breaking, etc. with addition of host value added features.

In case of any incidents leading to a valid claim, following steps should be followed:

1. Taking necessary steps to minimize the loss or damage.
2. In case of fire, fire brigade should be informed immediately
3. In case of theft or burglary, police should be informed immediately along with a list of items that are stolen with their approximate value.
4. Information should be passed on to the insurance company as well by phone and writing
5. Full co-operation to the surveyor appointed by the insurance company should be given and provision of necessary documents to substantiate the loss should be done.
6. A claim form issued by the company should be submitted along with the FIR copy.
7. In case of any rights of recovery exist against any other party responsible for the loss; one’s rights have to be subrogated to the insurance company on the payment of the claim.

What are the exclusions in the Householder Policy – The policies generally do not include:

• Loss or damage due to terrorism activities
• Loss or damage done due to nuclear radiation and related causes.
• Loss or damage done due to war situations.
• Accidents arising due to any illegal activity or any unlawful act.
• Cash, securities and documents are not covered under the policy. (Many companies cover these too with extra premium)

​Should you buy this policy? 
This is a must have policy for all. One cannot simply ignore the risk of natural or man-made catastrophe. However, while buying it is important to be aware of the inclusion and exclusion and at the same time the clauses under which the insurance company can repudiate one’s claim. So do you have this policy or planning to buy one? Do share your queries with us.