NRIs wishing to secure their homes or investments in India are eligible to avail of home insurance schemes offered by insurance companies like Standard Chartered, ICICI Lombard and LIC. Home Insurance Schemes protect the structure and contents of a home and an NRI can choose between insurance for only the building or its contents, or both. Damage due to man-made and natural calamities like fire, riots, terrorism, earthquakes, lightning, landslides etc. is covered by the home insurance policy.
The location of the home insured determines the rate of construction, recommended by insurance companies factoring in the cost of the material used already in the home. However, the contents within the home are computed on market value basis taking into account depreciation costs. Jewelry is exempt from depreciation.
The policy covers the losses to the structure and contents of a home due to any natural and man made calamities. Generally, the risk covers:
The home insurance policy insures the structure of the home for its reconstruction value and not for market value. Reconstruction value is defined as the cost incurred to reconstruct the home if it is damaged. On the other hand market value is a combination of cost of land, demand & supply scenario, etc.
Sum insured is calculated by multiplying the built up area of the home with the construction rate per sq. feet, e.g. if the built up area of a house is 1500 sq. feet and the construction rate is Rs.1000 per sq. feet, the sum insured for the home structure is Rs. 15,00,000.
The rate of construction is usually recommended by insurance companies for the location, and takes into account the material used in the home.