Why insurance companies may not cover your house

Old buildings are obviously more vulnerable so insurers don’t like to cover structures more than 30-40 years old. “This is one section which we do not actively seek to insure,” admits Sanjay Dutta, Chief of Underwriting and Claims, ICICI Lombard General Insurance.

If your house is more than 30 years old, chances are that it may be denied home insurance cover. Even if some company agrees to insure it, the premium will be quite high. Old buildings are obviously more vulnerable so insurers don’t like to cover structures more than 30-40 years old.

“This is one section which we do not actively seek to insure,” admits Sanjay Dutta, Chief of Underwriting and Claims, ICICI Lombard General Insurance. If your house is more than 30 years old, chances are that it may be denied home insurance cover. Even if some company agrees to insure it, the premium will be quite high usually followed when insuring new constructions.

The reinstatement method replaces the loss by paying the cost of reconstruction. The indemnity method pays the cost of the house after subtracting the depreciation. The depreciation is calculated at 2.5% per annum. Though the indemnity cover may come at a very low cost, it is not a good idea because it will not fully fund the reconstruction.