What to consider before buying Householder Insurance

When you talk to old people, they usually have lot to praise about joint families and their advantages, but young generation needs more freedom than a nagging family members telling them what is right and what is wrong at each point of their life. So here we have the concept of nuclear families (mostly DINKs) gaining more and more acceptance. Also with most people the birth city is different from the work-city, so this is an accepted fact by everyone. But with nuclear families comes their own problems and the biggest one is that, even though the assets are bought at higher pace (due to increased earnings), but so is the risk of loosing it all in either accidents or a house break. How can someone prevent it or at least take precaution (financial) about it?

The most usual and simple answer is to take an insurance against household property. This is called a householder's insurance policy. Even I am thinking of taking one despite the fact that I do not own a house yet. What a householder policy might cover (an example) ranges from burgalry to Workmen's compensation act.

But what should one keep in mind while taking such a policy? Here is a brief guideline on what to consider before buying it:
  • If you are insuring against house damange to fire or earthquake, make sure you dont just insure for the house's current price. Why? A house price also contains the land price. If say your house get destroyed in a fire or flood, as per the insurance policy, only the price of house infrastructure will be repaid, the land stays there, it doesn get destroyed so they wont give back the entire money. If you insure just against the house price, you are under-insured.
  • Building and FFF (furniture, fixtures and fittings), for instance, should be insured on a reinstatement basis because in the event of a loss, both would have to be replaced at today’s cost of construction or replacement.
  • Dont insure your house on basis of cost, rather insure it against the money you would need to build it today.
  • A similar argument goes for household goods, if you insure it against purchase price then after depreciation you wont get much back in a claim.
  • When you insure your jwellery or household electronic items, describe them as accurately as possible, with serial numbers or photographs taken.
  • Also think about taking a Workman compensation policy cover. This is to cover charges that might occur to domestic servants in case of accidents or damages while working at your house.
  • Read the burglary cluse carefully, it is mentioned that the house should not be vacant for long periods (one month or more) for claim to be refunded.


  1. Amongst the many companies offering House Holders insurance in India, which one do you think provides the best option.

  2. Thanks JPB for comments.

    My experience with financial products is that there is no best fit all and it is totally dependent on each one's needs. That is why financial products are complex to understand.

    I have a policy from Royal Sundaram based on my needs.