Minimum home insurance


What should be the bare minimum home insurance to go for to protect the building component?


Your home insurance calculation should follow a simple formula of multiplying the covered area of your home with the average rate of construction. So for a 2000 square feet apartment with
an average rate of construction of Rs. 1000 per square feet the minimum sum insured towards your structural component should be Rs. 20 Lakhs.


Hi Meera,

The Home Insurance coverage cost is decided based on all or some of the following parameters.

• Plan Type
The Home Insurance coverage will depend on whether you are insuring the building only, the contents only, or both. If you are only insuring the building, the value of the home structure will be taken into consideration. For contents, the value of personal belongings and jewellery will be considered. For a plan that encompasses a comprehensive cover for both contents and building, the value of both building and contents will be added.

• Value of the Building
The value of the building is the reconstruction cost and not the market value of the property. An optimum coverage should adequately compensate for the rebuilding cost. To find the building value, the built-up area of property and the construction rate per square feet will be multiplied.
For example, if the built-up area of your home is 1,200 square feet and the construction cost is Rs.1,500 per sq.ft, the sum insured for the building structure will be Rs. 18,00,000.

• Value of Contents and Jewelry
While calculating the Home Insurance coverage costs, you must also specify the value of the contents and jewellery. The insurance must be able to sufficiently cover the costs of replacement.

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BB Expert