Money Matters

Money Matters

I have shifted to a new house and have bought a lot of expensive things. How should I assess the value of my belongings for a householder’s insurance plan?


In order to insure oneself adequately, the value of the various belongings in your house should be assessed as per their replacement cost. Replacement cost means the cost of buying a similar new item. Since most of the items you have purchased are new, you can go for insurance on the cost of the articles. For articles that you might be shifting from your present residence, you should work out the replacement cost and insure them at that price. For example, if you have an air conditioner that is five years old and if you want to sell it, it may not fetch you more than Rs5,000. But, if you want to replace it with a new one, it may cost Rs16,000. Therefore, for the purpose of insurance, you should insure it for Rs16,000, which is the replacement cost. Insuring at a proper value will benefit you in the event of a partial loss.

I have a householder’s policy from New India Assurance. There was a theft in my house and I have received Rs25,000 as claim money. Is this amount taxable?


The claim money received against your householder’s policy is not taxable in your hands. Though income-tax regulations do not offer any tax exemptions on the premium paid on householders’ insurance policies, proceeds from a policy claim are exempt from tax.

I have a house in Ghaziabad that is at least 20 years old. I approached an insurance company to insure the building against fire and earthquake. Given the age of the building, the insurance company refused to insure my house. Do insurance companies have such a policy?


It is basically the decision of the underwriter of the insurance company to accept or reject a risk. Some companies, based on their experience, may decline insurance to old buildings. This time period could vary from company to company. Your house is not very old and, in all probability, if you approach another insurer, you will get insurance for your house.

I want to cancel my current motor insurance policy and take a policy with another insurer. Is this allowed? Also, will I get a refund during the policy period?


Yes, you can cancel during the policy period. Usually, the cancellation is based on two conditions. One, you are able to show that your vehicle has been insured elsewhere (at least for third party coverage) or shall be insured elsewhere because of its sale or any other reason. Two, the registration certificate for your vehicle has been legally cancelled by the regional transport office (RTO) for any reason whatsoever. On cancellation of policy, the insurance company retains the premium on short period scale and refunds the remaining premium. Also, you are eligible for a refund only if there has been no claim during the policy period. In case you have already taken a claim amount, you will not be entitled to any refund of premium.

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