Home insurance is to home-ownership what an airbag is to your car, or a helmet is to your bike. Many of us ignore getting the extra protection, but its value shows up only when we are in an emergency.
The home insurance cover helps you get significant monetary assistance when your home undergoes a natural calamity, theft, or any other man-made or act of God incident. When most people ask 'what is home insurance
,' they are referring about the insurance cover for the house's structure. All the contents of the house require a separate cover, which is often called home content insurance.
What is Home Content Insurance?
Home content insurance will help you recover the cost of repairs or replacement of several important objects in your house like electronic goods, furniture, jewellery, and some portable electronics. Here is an illustration to help you understand it:
Malti bought a new house on the outskirts of Pune with a considerable amount of loan, her savings, and her late husband’s provident fund reimbursements. She had two children and was very protective of her family. Her home insurance
covered a considerable portion of her home. But, since she was concerned about her family's future, she added a home content insurance cover to her policy.
One of her close friends was not supporting the additional premium she had to pay for the home content cover. She even tried to talk Malti out of it. A few years later, Malti had her home robbed when she was in Nasik visiting her parents with her children. The home was practically intact, but her TV, microwave oven, son's laptop, and even the ceiling fan were stolen. Since she lived on the ground floor, she understood that the thieves might have entered from the broken window.
She took account of all the goods stolen, filed an FIR, and immediately informed her insurer. At the end of her process, she got new electronic goods and a new laptop for her son, almost covering everything the robbers had stolen from her. Her friend realized the value of home content insurance.
How Does Home Content Insurance Work?
Understanding how home content insurance works can give you a better idea of what types of home insurance
products will cover what form of damages to your home content. Unlike home insurance, home content insurance can cover both tenants and homeowners.
- Homeowners: You can cover all the valuable items in your home like the furniture and electronic goods, as far as you own them. Even if you have a tenant using these goods in your home, you can get them covered.
- Tenants: You can get the insurance cover on all the goods you own and use. You can also ask your landlord to get home content cover to make sure you do not have to enter a dispute if there is some damage to any of the valuable goods.
The basic principle remains intact – all home content insurance covers will include the contents of your home like installed & portable electronic goods, furniture, and valuables. The key difference is in how these underlying goods are valued.
How Do I Estimate the Value of My Home Contents?
Estimating your home contents' value can be a little tricky, as it entirely depends on the type of cover you have. Here are some common variants of home content insurance and guidance on how you can use them for valuing the goods in your home:
- As New: In such arrangements, the insurer will treat your goods like they are new. The idea is to compensate for repairs and help you get the good running or installed in normal condition. Bill value, market value, and your good pre-incident value is usually the ideal cover for such insurance.
- New for Old: This variant covers your good's replacement with an identical one bought from the market. For instance, Malti had a specific model of TV that got stolen. She will now get compensated to get the exact model from the market if she had new for old home content insurance.
- Indemnity: Such insurance cover takes into account the depreciation your goods are incurring. For instance, your furniture will depreciate at a certain rate. The insurer will compensate you only for the depreciated value of the goods before the incident took place. Hence, make sure you ask your insurer ‘how do I estimate the value of my home contents’ when you are undergoing the documentation for indemnity home content insurance.
- What Does Home Content Insurance Cover?
It covers movable and immovable valuables, furniture, electronic goods, etc.
- Who Can Get Home Content Insurance?
Homeowners can get it for their goods, irrespective of who uses them in the house they own. Tenants can get home content insurance for the goods they own.