Home Insurance in India: What It Covers, What It Does Not and How to Choose

You insure your car, your phone and your health. Your home, usually your largest asset, often goes uncovered. Many owners assume that the bank's loan insurance or the society's policy covers them. Usually it does not, at least not for what matters to you. A fire, a flood, a burglary or a pipe burst can cost lakhs, and without a policy you pay for all of it.

In short: Home insurance covers damage to the building (structure) and to what is inside (contents) from named risks such as fire, flood, earthquake and theft. Set the sum insured on the cost of rebuilding, not the market price, read the exclusions and keep proof of your belongings.

What home insurance is

A home insurance policy pays you if your home or belongings are damaged or lost because of a risk listed in the policy. It is different from:

Home loan insurance, which pays the lender if the borrower dies. See home loan insurance vs term insurance.
Society or builder's insurance, which usually covers common areas, not your flat's interiors and belongings.
Health or life insurance, which cover people, not property.

India has a standard home insurance product for the market, and general insurers also offer their own versions. Check the insurer's policy document, since the covers and the names differ.

What is covered

Most policies list the risks they cover. Typical named risks include:

Fire and allied perils: fire, lightning, explosion, short circuit.
Natural disasters: flood, storm, cyclone, earthquake, landslide.
Man-made events: riot, strike, malicious damage, and sometimes terrorism.
Burglary and theft, often under the contents cover, with conditions.
Water damage from burst pipes or tanks.
Impact damage from vehicles, aircraft or falling trees.

Two parts of cover

Building (structure) cover. The walls, roof, floors, fixed fittings such as doors, windows, plumbing and electrical wiring. Covers rebuilding or repair.
Contents cover. Furniture, appliances, electronics, clothes, utensils and other movable belongings. Valuables such as jewellery and art may need separate listing or have a lower limit.

Flat owners should know that they usually insure the interiors and contents, while the building's structure may be covered by the society's policy. Ask your society what its policy covers, and whether you need your own.

Optional add-ons

You can often add extra protection for a small additional premium:

Loss of rent or alternate accommodation if the home becomes unliveable.
Personal accident cover for the owner.
Domestic helper cover.
Electronic equipment breakdown cover.
Jewellery and valuables cover with a declared value.
Public liability, if someone is injured in your house and claims damages.

Add only what you will use.

What is usually not covered

Read the exclusions carefully. Common ones are:

Wear and tear, gradual deterioration, rust and termites.
Normal maintenance and defects in construction.
War and nuclear risks.
Intentional damage or damage caused by the owner's negligence or fraud.
Loss of cash, securities or documents (some policies cover a small amount).
Damage to an unoccupied house beyond the days stated in the policy.
Theft without forced entry (some policies need signs of force).
Land value. The land under your house is not insured, only the building.

Sum insured: the most common mistake

Many owners insure for the market value of the property, which includes the land and location premium. Insurance should cover the cost of rebuilding the structure, which excludes the land. For contents, it should cover the cost of replacing items.

A simple example

A house has a built-up area of 1,200 sq ft. Suppose rebuilding costs about ₹2,000 per sq ft in your area. That is an assumed rate for illustration; use a local estimate. See how to estimate the cost of building a house.

Item	Calculation	Amount
Rebuilding cost	1,200 sq ft × ₹2,000	₹24,00,000
Contents (estimated replacement value)	Your list	₹5,00,000
Total to insure		₹29,00,000

If the market value of the land and house is ₹90 lakh, insuring for ₹90 lakh would mean paying a higher premium for cover you could never claim, because the insurer pays only the loss, up to the actual cost of repair or replacement.

Underinsurance can also hurt. If your sum insured is much lower than the real value, the insurer may reduce your payout in proportion, under the "average" clause in some policies.

Home loan and insurance

Banks often ask for property insurance, especially for construction loans, to protect their security. You may choose the insurer. Lenders cannot force you to buy a policy from a specific company. If your bank offers a package, compare it with other quotes. Premium for a long-term policy may be added to the loan, which means interest on it. See home loan documents and the approval process.

How premium is set

Premium depends on:

the sum insured,
the age and type of the building (flat, independent house),
the location (flood or earthquake zone),
the covers and add-ons you choose,
the policy term, with discounts for long terms in some cases, and
security features and claim history.

Compare quotes from at least three insurers, and compare the covers, not just the price.

How to choose a policy

List what you want to protect: structure, contents, valuables.
Estimate the sums insured using rebuilding cost and an inventory of contents.
Compare insurers on covers, exclusions, add-ons, claim process and reviews of claim settlement.
Check the deductible or excess that you must bear in each claim.
Read the policy wording before you pay, especially exclusions and conditions.
Declare everything honestly. Wrong information can lead to claim rejection.
Note the renewal date and renew before it lapses.

How to make a claim

Inform the insurer immediately, by phone, app or email, and note the claim number.
Report to the police in case of theft or a crime, and get an FIR copy.
Protect the property from further damage, and do not discard damaged items until the surveyor sees them.
Take photos and videos of the damage.
Submit documents: policy copy, claim form, FIR if needed, bills, photographs and repair estimates.
Cooperate with the surveyor the insurer appoints.
Follow up and keep records. If you disagree with the decision, you can escalate to the insurer's grievance cell and, if needed, the insurance ombudsman.

Keep proof of your belongings

Make a home inventory with photos and bills of major items.
Keep purchase invoices and warranty cards in a safe folder or in cloud storage.
Update the list when you buy something valuable.

Common mistakes

Insuring at market price instead of rebuilding cost.
Assuming the society's policy covers your interiors.
Not reading exclusions.
Not listing valuables.
Letting the policy lapse.
Delaying the claim intimation.
Giving incorrect information.

Frequently asked questions

Is home insurance mandatory?

Generally not, except when a lender requires it. It is a good idea for any owner.

Does home insurance cover a rented house?

A tenant can buy a contents policy for their belongings. The structure is the owner's responsibility.

Does it cover earthquake damage?

Many policies include earthquake as a covered peril, but check the policy. Cover may differ by zone.

Is the premium tax deductible?

For a self-occupied home, usually not. Check the current tax rules with a professional.

Policy terms, covers and prices differ by insurer and change. The example figures are illustrations. This guide is general information, not insurance or financial advice. Read the policy document before buying.