Mar 23, 2013, 01.37 PM | Source: CNBC-TV18
In an interview to CNBC-TV18, personal finance expert, Pankaj Mathpal of Optima Money Managers explained the conpect of home insurance and various aspects of the same.
Pankaj Mathpal (more)
Managing Director, Optima Money Managers | Capital Expertise: Fixed Income ,Mutual Funds ,Tax
Below is the verbatim transcript of Mathpal’s interview with CNBC-TV18.
Q: How beneficial is it for a person to buy home insurance? What all can we cover when we only buy a home insurance product?
A: Home insurance is very important though it is not very popular because there are two types of home insurance policies; one, which covers the basic structure of building and another policy, which covers the content. There maybe a policy, which is a combination, which covers building structure as well as the household articles.
So, when one is insuring a building or the basic structure of house, at that time it is important to buy the sum insured for cost of construction. I mean a house maybe costing Rs 1 crore but this value of Rs 1 crore is because of cost of land or market value of that house. However, cost of construction will be much lesser. Therefore, when one chooses the sum insured for that house, it is cost of construction or reinstatement value of that house, which may include the cost of water tank or security system in the building.
As far as household articles are concerned, there is different cost for all the items but it should be depreciated value, means today’s value of these used items, if one wants to sell those items or wants to buy, the item in the same condition, how much that will cost.
Most important part, when one renews policy, unlike life insurance one has to pay same premium every year, here, price of those things, means depreciated value or in case of gold jewellery, maybe the price has gone up. So, every year, when it is renewed, one should see that time the value of those household articles appliances, jewellery or even public liability is also insured under home insurance policy. Therefore, home insurance is very important because any natural calamity or manmade calamity, fire, theft, burglary or even earthquake, etc is covered in these policies. So, people must consider home insurance.