The tranquil world of 53-year-old Chennai-based Ramesh Shankar came crumbing down with the 2015 Chennai floods. “I woke up feeling water splashing next to my bed in my first-floor flat in Kotturpuram,” he narrates. The incident resulted in his entire worldly possessions—TV, fridge, furniture, appliances, clothes and important documents getting all wet and damaged. “My car was submerged and I was saved, because of the comprehensive insurance, including engine protection that I had taken on a whim paid for its repairs,” he says with a smile.

“I just did not expect the house to be damaged in this fashion and had not thought of insuring the house,” he states in a sombre tone. Shankar re-built his life over the next three months and made his house liveable again. The cost of coming back to terms set him off by a few lakhs. “I was lucky that I got some money from the state government and my employer extended a generous loan at no interest,” he says. However, the trauma has not left him or his wife. “She was so emotionally attached to everything that we had built together painstakingly over the past three decades,” he recounts.

“Not many are aware that valuable assets in their homes can be insured at a minimal cost. Another common misconception is that home insurance does not provide a cover against natural calamities and it only covers fire and allied perils,” explains Sasikumar Adidamu, CTO – Non Motor, Bajaj Allianz General Insurance. Welcome to the reality of lack of awareness of insurance for your assets–home, vehicle, gadgets and appliances and anything else that means the world to you. The good news is that there is some form of insurance available to insure your worldly possessions.

Insulate your homes from mishaps

At a very basic level, home insurance comes with two sub-sections: one that covers the building and the other its contents against fire. If you live in your own house, you should look to buy cover under both these sections. However, if you live in a rented house, you can’t take the building insurance, but you must take insurance for the contents; you could include everything inside your house in addition to the basic insurance for damage and even burglary.

While going in for insurance, make sure everything that you wish to insure is listed in the policy. “Ensure that the values are adequate for reinstating the property. Normally, bankers mandate for taking insurance for the amount of the loan which will not cover your reinstatement cost. Be careful about the adequacy of sum insured for the structure. Insure all the contents against fire, burglary and breakdown,” advises K Sanath Kumar, Chairman and MD, National Insurance.

One of the reasons why most people don’t land up taking a home insurance is due to the elaborate and complex application form with extensive details, which makes the process of taking a policy very difficult. However, exploiting this gap, some insurers have made it simpler and easy to opt for by introducing a comprehensive threshold value for the contents of the house instead of detailing the price of everything in the house.

One important factor to consider when arriving at the value of contents of the house at the time of insurance is its replacement value instead of the depreciated value. More importantly, when insuring for a longer term, do update the contents of the house and its value from time-to-time.

A safer ride

The mandatory requirement of liability insurance enforces people to insure their vehicles before they can ride them on the road. But that alone should not be the driver to take this policy, as your car faces financial implications of being part of an accident which could cause damage to it. “My car just skidded on the wet highway and the impact resulted in repairs worth Rs 10 lakh,” states Delhi-based Praveen Khanna. He was lucky to have a comprehensive car insurance in place.

Several new car models entering the roads each day has been one of the reasons for heavy traffic on the roads. Naturally, with this increased traffic comes the possibility of accidents, which can prove expensive in the absence of insurance. There are very few people who repair cars these days, as most car parts are often replaced. Due to this, the depreciated value of the car could actually leave you with a deep hole in your pocket, at the time of making a claim due to accidents.

Taking a cue from such examples, insurers have started to offer add-on covers. Today, there are add-on covers available with motor insurance such as engine protection and zero depreciation. “Zero depreciation is very useful when you have to deal with part replacement,” warns Puneet Oberoi, CFP, Excellent Investment Advisorz. Take Hyderabad-based Bhaumik Parikh, who believes in the value of add-ons. He has opted for zero depreciation, key replacement and roadside assistance to boost his car’s security, with the additional premium working out to just over Rs 3,000 a year. “I believe, it is important as the covers promise support in key replacement and facilitate emergency transport and hotel expenses in case of an accident. Loss of personal belongings during the incident is also covered,” he says. There are people who also take tyre replacement addition.

Other than your home and car, one of the most prized possessions is the mobile phones; smart phones are very fragile. The rising number of phones with cracked screens has made insurers take the cue to offer mobile phone insurance. These are available at the time of buying the phone and cost very little, in a case there is a replacement to be made.

The lesson for you is to list out things that are expensive to replace in your home and then scout for a policy that can help you transfer the financial risk of residing in them to a policy which will work for in case of claims. Going by the claim rates, one should feel encouraged to opt for insurance wherever possible than stay unguarded and face huge financial implications like Shankar had to face.

preeti.kulkarni@outlookindia.com