Standard home insurance policy at affordable premiums: All you need to know

Higher sum insured coverage: Rather than the market value, the coverage under this policy takes into account the cost which will be incurred in reinstating or replacing the covered items. The sum insured can be higher than this value but not lower.

Affordable premium: Under BGR many insurers are offering the coverage at affordable rates. For instance, you can get Rs 1 crore sum insured at an annual premium of Rs 2,466 from Digit, which effective means an annual premium Rs 247 for each Rs 1 lakh of sum insured. Over the period of 10 years you spend Rs 24,660 to for a protection of Rs 1 crore.

A special feature of this policy is that underinsurance does not apply. Here's an example to understand: Say the area of your home is 100 sq.m and the rate of cost of construction for the city is Rs 15,000 per sq.m. By mistake, you have declared the area as 90 sq.m., and your home building is insured for Rs 13.5 lakh instead of Rs 15 lakh. If there is a loss that requires repairs that costs you Rs 5 lakh, then the insurance company will pay you Rs 5 lakh.

Annual escalation in long-term policy: The cost of replacing re-construction and re-building material rises with time due to inflation which means that the cost of constructing the house 10 years later would be a multiple of what it is today. To address this, BGR policy comes with an auto escalation feature under which the sum insured amount is raised annually. Being an inbuilt feature this will not cost extra premium for the policyholders in future.

Daily escalation for annual policy: Price rise not only happens annually but also gradually. To give an identical benefit within one policy year, BGR offers daily escalation of sum insured. For an annual policy, the sum insured is automatically increased each day by an amount representing 1/365th of 10% of sum insured at the Policy Commencement Date.

According to the IRDAI guidelines, the common damages that are covered under the Bharat Griha Raksha include fire, explosion or implosion, lightning, earthquake, volcanic eruption, or other convulsions of nature, storm, cyclone, typhoon, tempest, hurricane, tornado, tsunami, flood and Inundation, landslide, rockslide, bush fire, forest fire and jungle fire.

The policy also covers damage caused by impact of or collision caused by any external physical objects such as vehicles, falling trees, aircraft, walls etc. Additionally, the policy covers any physical loss or damage, or destruction caused to the insured property by theft within 7 days from the occurrence of and proximately caused by any of the insured events.

Besides the actual damage, the policy covers many associated costs which often occur in case of a major damage. It pays up to 2% of the claim amount for reasonable costs of removing debris from the site. Some man-made disasters are also covered under this policy which includes riots, strikes, malicious damages, acts of terrorism and missile testing operations.

In many cases, any damage to the house mostly results in damage to the contents inside it. For this, BGR offers automatic coverage. The sum insured for general home contents is automatically taken as 20% of the sum insured of the home building which is capped at Rs 10 lakh if the home building is covered. If a policyholder does not want this feature, he/she can opt out as recorded choice.

Certain damages are not covered such as loss, damage or destruction to any electrical/electronic machine, apparatus, fixture, or fitting by over-running, excessive pressure, short circuiting, arcing, self-heating or leakage of electricity from whatever cause (lightning included). This exclusion applies only to the particular machine so lost, damaged or destroyed.