I am looking to buy home insurance for my apartment. If I buy a long-term policy (10 years) now, will the rates be locked-in for the period, regardless of increase in premium for renewals?
—Harpal Khanna
Yes. If you buy a long-term policy, premium is charged for the entire period at a go. Once such premium is paid, risk cover is issued for the entire period. The insurer cannot ask for additional premium in future years. However, you must make sure that the insurance is issued on reinstatement basis and with an escalation clause for sum assured. This insures that even if there is damage in the later years, your insurance cover is adequate and cannot be classified as under-insurance by the insurer. Also, you get paid actual costs of repair rather than a depreciated value.
