Photo: iStock
Photo: iStock

Damages due to short circuit fire not covered

Home insurance plans pay for fire damage occurring due to any reason. So, if the fire in your neighbour’s house spreads to your house, you would receive the claim

I recently lost my baggage at an airport. After filing multiple complaints, the airline compensated me with $500 as per their policy. However, I also have travel insurance that pays for baggage loss. Can I still raise a claim? My estimated loss is around $650.

—Naveen Bakshi

Yes, you can claim from your travel insurance policy for baggage loss. However, at the time of claim, you should mention the details of the claim already paid by the airline. For the claim to be settled, the insurer needs a report from the airline stating that it was responsible for the loss of the checked-in baggage. If the airline has paid for the baggage loss, the report would contain the fact. The insurance company would then pay you the remaining amount of loss.

Most insurance policies are designed as indemnity plans. The focus of these plans is to reimburse the actual loss incurred by the policyholder. It is not possible to claim more than the actual loss.

The other type of insurance plans are called fixed-benefit products. Under these, the sum assured is pre-defined and paid when the event is triggered. Only a handful of plans are designed as fixed benefit. The compensation paid by such a plan is not dependent on the actual loss incurred or the compensation received from other sources.

I have a home insurance policy that covers accidental fire. Will my insurer still pay if the fire from a neighbouring house damages my house?

—Mani Rao

Home insurance plans pay for fire damage occurring due to any reason. So, if the fire in your neighbour’s house spreads to your house, you would receive the claim.

Forest and short circuit fire is excluded under standard home insurance. However, forest fire can be covered by paying marginally extra premium. The short circuit exclusion doesn’t cover the item damaged due to short circuit. Damages to other items remains covered.

Your insurer is likely to sue the neighbour to recover the damages. However, they have to first indemnify you for the losses incurred and then recover from the neighbour. To protect yourself against the reverse situation, where you are sued for a fire that damages someone else’s property, consider buying a third-party liability insurance or having this included as an add-on in your home insurance. Several home insurance plans offer third-party liabilities insurance as an add-on.

Abhishek Bondia is principal officer and managing director, SecureNow.in. Queries and views at mintmoney@livemint.com

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