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Property Insurance
In our last article we tried to give you more information about Property Insurance such as
Fire Insurance and Auto Insurance. In this article we will discuss you clearly about other
property insurances such as Home Insurance, Earthquake Insurance and Tittle Insurance.

Home Insurance

Home insurance, also commonly called hazard insurance or homeowners insurance (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 occur at
the home. It needs 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 a variety of 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 every risks.

The home insurance policy is generally a term contract 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 lesser
premium if it appears less likely the home will be damaged or destroyed: for instance, if the
house is located next to a fire station, if the house is equipped with fire sprinklers and fire
alarms.

Types of home insurance

Home insurance in India has a key role to play in the protection of insured’s house or
building structure and valuable possessions or building content. Home insurance policy is an
assurance provided by the insurance company that combines insurance on the home, its
contents the personal possessions of the home owner, as well as insurance covering
accidents that may take place at the house like fire and natural calamities; the coverage of
the risk however depends on the type of policy. There are mainly two types of home
insurance in India;

Building insurance
Content insurance

Buildings Insurance

Buildings insurance is an essential part of property investments. The compulsory obligation

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made by the housing finance companies has strengthened the need for insurance in
combination with property investments. Insuring the building or building structure is
important since it protects insured against inevitable losses in case insurers building is
destructed and debilitated in any natural or man-made calamities. The housing finance
companies are insisting on building insurance so that in the event of a disaster it can be
repaired or rebuilt, as lenders don't want to be left without security for their loan, a home
insurance policy should cover expenses to rebuild insurers home in the event of it being fully
destroyed or damaged to the point that complete rebuilding is necessary (in eventualities
like earthquake, fire etc).

Different home insurance companies have different specifications for policy coverage; Home
insurance companies in India generally have home insurance plans that insure the building
structure of insured’s’ home for its reconstruction value. This is the cost incurred to
reconstruct the home if it is damaged and not for its market value such as the value of land
etc. Sum insured is calculated by multiplying the built up area of insurers home with the
construction rate per sq. feet.

Home insurance plan for buildings are generally meted out on conditions as per the policy
terms arising out of conditions like;

Fire, Lightening, explosion of gas in domestic appliances

Bursting and overflowing of water tanks, apparatus or pipes.
Riot, Strike, Malicious or Terrorist Act
Flood, Inundation, Storm, Typhoon, Hurricane, Tornado or Cyclone
Damage due to earthquake, subsidence and Landslide (including Rockslide).
Damage caused by Aircraft & Impact damage
Third party liability and personal accident.

Content Insurance

Content insurance may be considered optional but with the threat of burglaries, natural
disasters and fire, content insurance covers are rising in demand, contents insurance for
home insurance plans includes protection to movable goods, possessions or contents in the
house; anything that is not a fixed parts of insured’s home, for example insured’s appliances,
electronic goods, furniture and clothing.

Similarly as the modalities adopted in building insurance, different home insurance

companies in India have different policies for content insurance, most of the companies
comply with insurance plans where a value equal to the market value of household contents
i.e. the value for which this used item could be bought or sold in the market is covered as
insurance.
The insured amount given against the perils for building or structure and its contents is
estimated either on 'reinstatement value' basis (which is the value for replacing the item
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with a new item of same type and make) or on 'market value' basis (which is the
reinstatement value less depreciation depending on the age of the item).

Protection under Content Insurance

Content insurance offers protection against various perils including:

Fires
Storms/flooding
Explosions
Theft and vandalism
Valuables such as jewellery, cameras and watches against all risks,
Cover against all kinds of accidental breakage of plate glass fixed in doors and window
frames.
Loss/damage to domestic appliances due to electrical and mechanical breakdown.

Home insurance can be availed for both building and content combined, but, most home
insurance plans in India excludes underinsurance of the property value, willful destruction of
property, loss, damage or destruction caused by war perils, wear and tear and atmospheric
conditions etc, damage due to an act of terrorism (unless specifically covered) and losses or
damages incurred when premises are unoccupied beyond 60 consecutive days.

The losses or perils covered under this policy

Home Insurance covers natural and man-made calamities.

Fire
Earthquake
Lightning
Floods
Explosion of gas cylinder
Spread of Fire due to short-circuit
Riot, Strike, Malicious damage
Aircraft laws
Impact from rail/ road vehicles
Storm, Cyclone, Flood
Landslide
Burglary
Terrorism.
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Key Benefits
Instant Coverage
No Documentation
Simple and easy claims process
Long term discounts from 15% to 50% based on the tenure
Coverage against earthquake
Architect’s/ Consulting Engineer’s fees are also cove

Eligibility

Home loan eligibility for Resident Indians depends upon the repayment ability of the loan
applicant, the maximum loan that can be sanctioned differ with the banks and other housing
finance companies (HFC) and usually, the maximum loan amount granted is 80 to 85% of the
cost of insures home. Home loan eligibility corresponding to repayment option is based on
the following factors, even if, the eligibility criteria may vary according to the HFCs
regulations.

Home loan Eligibility Criteria

Age (Minimum) 21 Years

Age (Maximum) 58(salaried)
60(Public limited/Government Employees)
65 (self employed)
Should be a Graduate
Stable source of income and saving history
Number of dependents, assets, liabilities
Other income sources like Spouse's income

Importance of Home Insurance

Home Insurance has advanced as one of the most enterprising sectors in the real estate
scenario in India, as more and more investments are made in the real estate sector, there
has been a rising demand for home finance and home insurance simultaneously. The
significance of home insurance in the protection of insurers’ house and valuable possessions
is as importance as protecting insures family from any hazards that act as threat to life and
property.

The policy provided by the home insurance companies act as a guarantee that combines
insurance of the home, its contents the personal possessions of the homeowner, risk
attached to burglary; as well as liability insurance for accidents that may occur at the house
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like fire and natural calamities, the amount of the risk covered however depends on the type
and content of the policy. A usually configured home insurance policy regularly covers
calamities in two categories - natural and man-made.

Earthquake insurance

Earthquake insurance is a form of property insurance that pays the policyholder in the event
of an earthquake that causes damage to the property, most ordinary home owners’
insurance policies do not cover earthquake loss. Most earthquake insurance policies feature
a high deductible, which makes this type of insurance helpful if the entire home is
destroyed, but not helpful if the home is merely damaged. Rates depend on location and the
probability of an earthquake, rates may be cheaper for homes made of wood, which
withstand earthquakes better than homes made of brick. If the relatives/family members
can create their identity and bona fides, it may just make things that much easier for
insurance companies to settle claims. What happens generally in the after effects of natural
disasters is that survivors/inheritors, overcome with grief and shock, find it difficult to
harness their memory, little realizing that those seemingly trivial pieces of paper and bland
e-mails can go a long way in securing a safe future.

Tips for Buying Earthquake Insurance

If person live in a quake-prone region and they can afford it, the best way to protect their
investment in your home is to retrofit and buy earthquake insurance.

The decision whether or not to buy EQ insurance is an individual, financial decision, Key
factors to research and consider are:

The financial strength of the companies,

The features and pricing of their policies,
The amount of equity people have in their home,
The age and style of construction of their home and foundation.

If people decide to buy EQ insurance, shop for limits that are adequate to fully replace their
property, engineering costs, required development to comply with building codes,
temporary living expenses, outbuildings, etc

Policies with 10% as opposed to the standard 15% deductible are now available but of
course they're more costly, the price and high deductibles for EQ policies have led many
people to avoid buying the product, but people should remember that; If they live in a
quake-prone region, going "bare" with no insurance means they have a 100% deductible -
they'll bear the entire risk themselves.
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Title Insurance

Title insurance is an insurance policy that protects residential or commercial property

owners and their lenders against losses connected to the property’s title or ownership.
Before people purchase their home, it may have gone through several ownership changes,
and the land on which it stands went through many more. There may be a weak link at any
point in that chain that could emerge to cause trouble, for instance, someone along the way
may have forged a signature in transferring title. Or there may be not paid real estate taxes
or other liens. Title insurance covers the insured party for any claims and legal fees that
occur out of such problems. The required insurance protects the lender up to the amount of
the mortgage, but it doesn’t protect equity in the property, for that person who takes an
insurance need an owner’s title policy for the full value of the home. In numerous areas,
sellers pay for owner policies as part of their obligation to deliver good title to the buyer, in
other areas, borrowers must buy it as an add-on to the lender policy. It is advisable to do
this because the extra cost above the cost of the lender policy is relatively small.

The owner’s protection lasts as long as the owner or any heirs have an interest in or any
obligation with regard to the property, when they sell, however, the lender will require the
purchaser to acquire a new policy. That protects the lender against any liens or other claims
against the property that may have arisen since the date of the earlier policy.

Types of Title Insurance

There are two main types of title insurance policies:

Owner’s policy
Lender’s policy

Owner’s policy:

This protects the property owner from various title-related losses that are listed in the
insurance policy, for as long as the property is owned, an owner’s policy sets a maximum
amount of coverage.

Lender’s policy:

This protects the lender from losses in the event that the property’s mortgage is invalid or
unenforceable; a lender’s policy generally provides coverage for the amount of the
property’s mortgage. People can buy title insurance for both residential and commercial
properties.
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Types of residential Title insurance include:

Policies for new homeowners

Policies for existing homeowners
Policies for lenders in a residential mortgage

Residential Title insurance policies can insure:

houses
condominiums
cottages
rental units
vacant land
cooperatives
leased properties
rural properties

Types of commercial title insurance include:

Policies for individuals purchasing commercial properties

Policies for lenders in a commercial mortgage

Commercial Title insurance policies can insure:

office buildings
industrial buildings
shopping centres
apartment buildings
rental units
warehouses
vacant commercial land
leased commercial properties

Title Insurance Cover

Title insurance policy may provide protection from such losses as:

Unknown title defects (title issues that prevent you from having clear
ownership of the property);
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Existing liens against the property’s title (e.g. the previous owner had
unpaid debts from utilities, mortgages, property taxes or condominium
charges secured against the property);
Encroachment issues (e.g. a structure on your property needs to be
removed because it is on your neighbors’ property);
Title fraud;
Errors in surveys and public records; and
Other title-related issues that can affect your ability to sell, mortgage, or lease your
property in the future.

Title insurance policy will protect insured as long as he or she own their property, and will
cover losses up to the maximum coverage set out in the policy, it may also cover most legal
expenses related to restoring their property’s title.

Exclusions under Title Insurance:

When purchasing title insurance, it is important to read the policy and ask questions to be
aware of the coverage that is provided, people also need to be aware of possible exclusions,
which may include:

Known title defects (that were revealed to you before you purchased your property);
Environmental hazards (e.g. soil contamination);
Native land claims;
Problems that would only be discovered by a new survey or inspection of your property
(e.g. the property is smaller than originally thought);
Matters that are not listed in public records (e.g. unrecorded liens and encroachments);
and
Zoning bylaw violations from changes, renovations or additions to

Title insurance does not provide damages for non-title related issues. It is not a home
warranty or home insurance policy, and will not provide damages for:

Damages due to flooding, fire or sewer backup;

General wear and tear of your home (e.g. replacing old windows, a leaky roof, or an old
furnace);
Theft (e.g. a burglar breaks into your home and steals your television); and
Other losses or damages due to non-title related issues.