I have a villa that I have listed on a travel portal for renting. Is it possible to take home insurance for such a property? What all will such an insurance policy cover? The value of the villa is 4 crore.

—Ritesh Sawant

Yes, if you are the owner of the villa, you can buy a home insurance policy for it. The policy has limited impact on whether the villa is rented or self-occupied. However, if it is left vacant for an extended period of time, you must inform the insurer.

A home insurance policy comes in three variants—structure insurance, contents insurance and package policy. Structure insurance covers the structural framework such as the roofs and walls of the house insured. Content insurance covers the contents of the house such as furniture, fittings and electronic appliances. A package policy covers both the structure and its contents.

A structure insurance policy, therefore, is a must for protecting your property against possible damages from natural disasters such as fire, flood or earthquake. Moreover, if you have contents in the villa which can be damaged, you must take a package policy. For structure insurance, the sum assured will be based on the reconstruction cost of the building and does not include the land cost.

The sum assured for a standard home insurance, which includes all the three covers mentioned above, should be the replacement cost of the house you have insured.

A few insurers now offer an all-risk policy for home insurance on the registered value of the house, including the cost of land. This is useful in cases of total loss where the home is completely destroyed and unrepairable. The sum assured in this case is large and will allow you to buy a replacement home.

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

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