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The last thing you would want to hear when you claim is that your insurance won’t be able to cover your total loss or your insurer is refusing to pay the full value of your claim. The only reason is that you’re underinsured.
The term underinsurance refers to the situation when something is insured for less than its current value. Underinsurance is a common issue when it comes to Home content insurance. When a person does not know the real value of any content of the home as well as the structure value and settles for whatever is offered while buying home insurance. This could lead to insufficient coverage at the time of claiming the policy. Having said that here’re some important pointers related to the concept ‘underinsurance’ and its impact on the home insurance claiming process.
The concept underinsurance comes with the following features:
Now that you can comprehend the meaning of being underinsured in terms of home insurance, it is imperative to know how to avoid it. Here you go:
India is the second most underinsured country in the world. Underinsurance is a serious issue because it mirrors that the insurance holders have to pay the financial costs of any large claims out of their own pocket. Here’re the grounds where you can be considered as underinsured or the insurer may deny your claim request:
Underinsured Contents: Not so expensive and portable contents can also be underinsured. It happens when you only insure the expensive contents as you think you would have it with you anytime.
For example: Say you use a desktop which concludes of a screen, CPU, keyboard and a mouse. Now you get the most expensive part of that desktop insured which is a CPU and Screen. Then, you won’t get an insurance cover for the keyboard and mouse and the wires used to connect each other. That’s where you’ll be underinsured as you have not declared the combined cost of the whole set of your desktop but of the most expensive part of it like the CPU and Screen.
To Cut a Long Story Short!
Most of the people in India having home insurance are underinsured. The reason is they don’t know the actual value of their property or somehow can’t find out how much insurance they require. The principle of underinsurance comes into play when you have to bear a portion of the total loss as the insurer is not liable to cover it. Hence, it is very important to be careful while buying a home insurance policy to avoid being underinsurance. With multiple of options available in the market it is quite obvious to get confused. So, the rule of thumb is always consider the present market value of the property while buying home insurance. Don’t forget to compare different plans to get the best deal at an affordable price, and avoid being underinsured.