My flat caught fire two months back. Since I had a fire insurance policy, my costs were covered. However, the flat just beneath mine also suffered some damages. Now, the occupants of that flat are asking for compensation. Should I approach my insurance company and ask them to cover their costs too? If they refuse to do so, what is the other option?

The standard fire and special perils policy, unfortunately, does not cover the liability of the insured towards the third parties. Therefore, you can approach your insurers only if you are also covered under a public liability policy. Public liability cover is available as a part of the householder’s package policy. The only other option is that if somebody else was responsible for the outbreak of fire—your housing society or builder—you may recover the cost of damages from that person and, in turn, pay the owners of the flat below yours.

SCOOTER INSRUANCE POLICY

I bought a scooter four years back, but stopped using it a year later. I have not renewed its insurance all these years. Now, I want to sell it. Do I need to buy a motor insurance policy before selling it?
It is obligatory on the part of vehicle owners to get a third party insurance cover if they intend to bring the vehicle on road. Since you did not use the scooter for the last three years, you don’t need to get a policy for it. Now when you want to sell the scooter, you will have to buy at least a third party cover for the vehicle. In fact, this is one of the important documents required for the registration of the vehicle in the name of new buyer.

AUTO INSURANCE

My company has given me a car. Do I need to take an auto insurance policy for it, or will the company take it?
Who will take the policy basically depends on your contract with the company. Generally speaking, if the company has purchased the car in your name and is recovering the cost of the car from your salary in instalments, the responsibility to insure the car lies with you since the owner has to insure the car. On the other hand, if the company owns the car and it has been given to you for use, it is the company that should insure the car. However, you must clarify the matter with your employers and act accordingly.

FAMILY HEALTH POLICY

I had taken a family health policy before my daughter was born. Should I take a separate policy for her?
All health insurance policies have to be issued in the name of individuals. So, for your daughter, you will have to buy a policy in her name. Normally, standalone health insurance policies are not offered to individuals below the age of five years. But, children below the age of five can be covered under a mediclaim policy if one of the parents is also covered under the same policy. In your case, since you already have a family health insurance policy, you can get her name included in it. Insurers will not offer a higher sum insured for your daughter, but you can always go for a family floater policy where, if a situation arises, the total sum insured is available for each member of the family.

PAID UP VALUE

When exactly does a life insurance policy acquire a paid-up value? How is the value determined?
If premiums are paid for three years for a policy, but not subsequently, the policy is said to have acquired a paid-up value, although literally speaking, it is a lapsed policy. The paid-up value is calculated by multiplying the sum assured by the ratio of number of premiums paid under the policy and the number of premiums payable. Most policies stipulate that if the value thus calculated is lower than Rs 250, the policy is not said to have acquired a paid-up value. Once a policy acquires a paid-up value, it is disqualified from participation in future bonuses.

TERM IS BEST

Why should one prefer term plans for life insurance over unit-linked plans and Why are term plans considered the best?
Term insurance is the purest form of insurance—it provides cover only for the risk of death of the life assured. If the life assured dies during the policy period, his legal heirs receive the ‘sum assured’ under the policy; if the life assured survives the term, there is no return. The entire premium paid in a term assurance plan, that is, the cost of buying the insurance cover, is utilised for covering the risk of death of the life assured. It is for this reason that insurers offer this plan at the lowest cost. The best thing about this plan is its cost advantage. Due to this, one can afford to secure an adequate amount of coverage.

CHILDERN POLICY

I want to insure the life of my two-year-old son. Should I take a policy in his name or mine?
The basic aim of taking a policy is to provide for those who are financially dependant on the life assured. Since children do not have dependants, the purpose of securing a child policy is to save for the child’s future. An earning parent is an integral part of child policies as they have to propose the policy and pay the premiums. Different insurers offer different products. Whether you insure your son or yourself will depend on the policy you choose. The best, in our opinion, will be to insure your son under a policy, which provides for premium waiver in case something happens to you. Normally, children policies cover the risk after the deferment period, which may be two years after the commencement of the policy.