NRI Home Insurance: Policy, Schemes and Coverage for Non Resident Indians

Properties owned by non-resident Indians have grown in numbers in the last decade, as investment in realty for investment and personal use has risen sharply. NRIs wishing to secure their homes or investments in India are eligible to avail of home insurance schemes offered by insurance companies.

Home Insurance Schemes protect the structure and contents of a home, and a proponent can choose between insurance for the building or structure or its contents, or both.

Policy coverage
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:

Fire
Riot, strike & malicious damage
Explosion & implosion
Earthquake
Lightning
Storm, cyclone, tempest, tornado, hurricane, flood & inundation
Damage due to impact by vehicles
Missile testing operation
Subsidence, landslides and rockslides
Leakage from automatic Sprinkler installations
Aircraft damage
Bursting and/or overflowing of water tanks, apparatus and pipes

Burglary cover (only for contents):
The assets within the home are also covered against loss due to theft or an attempted housebreak. It also covers loss of jewellery, silver articles and precious stones kept under lock and key.

Optional covers:
Some insurers offer optional cover for:
Terrorism - any damage and loss to the structure and / or contents of the home due to acts of terrorism.

Additional expenses of rent for alternative accommodation - If the policy holder is forced to shift into an alternative accommodation because the home is destroyed or damaged by any insured peril, the policy will cover the additional rent incurred.

Sum insured
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.

The contents of the home - furniture, durables, clothes, utensils, jewelry, etc are valued on market value basis i.e. the current market value of similar items after depreciation. Depreciation does not apply for jewellery.

Insuring a home is imperative for an NRI, and a thorough study of services and options available with a host of insurance companies must be made before a decision is mad.

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