Securing your home

Did you know that in the earthquake that took place in Bhuj in 2001, 90% of the homes were destroyed and in the 2005 Mumbai floods, over 1.75 lakh houses were damaged?
A startling fact that points to the importance of what insurance can potentially do for your home. Significant growth in the housing industry and increasing disposable income this segment has had a positive effect on growth in home insurance as well. Again home insurance is important today due to rising incidents of thefts, earthquake prone zones and areas that are subject to flooding and insurance is the best way of reducing these risks by paying a small premium.

The specifics

The requirement of a home insurance is overlooked and understated in India. Home insurance plans allow you to protect your house and household items against fire and other perils, such as theft, burglary, accidental breakdowns and the like. If you intend to buy householders’ insurance, you should purchase a policy that provides cover for your house as well as all the contents in it.

Opines Anil Rego (CEO & Founder Right Horizons), “According to estimates only two per cent of the homes are insured in India, but it still means that about 46 million homes are insured! There are about 14 general insurance companies providing home insurance cover and some new entrants like Videocon are venturing into this space considering the market potential.

Home insurance in India provides cover to a host of things including fire and allied perils, burglary and robbery, jewellery and precious stones, plate glass, domestic appliances, electronic equipment, pedal cycles, baggage insurance etc.

Important among the items that are not covered is cash and jewellery valued more than 15000, if the same was not included in the proposal form along with valuation report of a government approved valuation jeweller.” 

Many types of covers

Says Gaurav Garg, MD and CEO, Tata AIG General Insurance Company Ltd, “There are different types of home insurance products in the market. Cover for building only, cover for building and contents and cover for contents only. Within these there are various types of products mixes covering pedal cycle, public liability cover, jewellery cover, cash in transit cover etc.

“Tata AIG has three unique products available in the market today. Tata AIG Instachoice Home Insurance is a do-it-yourself insurance product which allows you to choose and design your own home insurance cover instantly. Tata AIG’s Home Secure Supreme is a flexible home insurance plan which can be customised for individual needs. The plan offers you 15 comprehensive coverage options to choose from and India Fire - Fire & Special Perils Cover buildings (RCC construction) and your household contents.”

Understand the policy

While buying a home insurance policy, make sure that you read and understand the policy - coverage, exceptions and exclusions in the plan. Your cover should include your house, belongings, liability to others if some mishap occurs and your living expenses if you are forced out of your house. Basically, if a disaster occurs, your policy should help you to rebuild your home and replace everything in it.

Take an inventory of your possessions. If you have to file a claim, two things need to be done - prove you own certain items and verify their value. Some insurance companies advise clients to go through their homes with a video camera, walk through each room, and ensure that you have everything you own on tape.

Update policy value

Always make sure that you update your policy value - to cover various assets that you might add to your house as well as the rate of inflation. Insurance companies are looking at ways to improve sales of this product. Customised plans are launched which can be sold by intermediaries very easily. Different plans address needs of different customer segments. “In Future Generali we are selling customised home package plans through our Mallassurance teams also with various price points. We are looking at introducing off-the-shelf products in home insurance. In addition we have launched on line products in Home insurance,” says K G Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance Co Ltd.

Adds Mukesh Kumar, Head Marketing, HDFC ERGO, “While owning a house today, what these youngsters forget is the protection of their property. The financial institutions providing housing loans ensure that the individual gets himself a home loan protection policy like Home Credit Assure being offered by HDFC ERGO but no one ever bothers to insure the house that is being bought. There are many convenient options available in the market that helps one not only insure the property but also the belongings. Home insurance plans allow you to protect your house and household items against fire and other perils, such as theft, burglary, accidental breakdowns, and so on.”

“The cost for buying the home insurance policy is very nominal. On an average it would be in the range of Rs 70-Rs 150 per lakh. So, if you own a house worth Rs one crore, your home insurance would not cost you more than Rs 15, 000 annually. Like a mediclaim policy, one must ensure that home insurance is also renewed year-on-year for the safety and security of one’s house,” adds Kumar. The sum insured is calculated by multiplying the built-up area of your home with the construction rate per sq. feet. The sum insured for the structure is calculated based on the reconstruction value and the contents of your home are valued at the current market value of similar items after applying depreciation.

New vistas

As homes become greener and more eco friendly, there is a need to provide a special kind of insurance cover that is currently lacking in the Indian market. “We haven’t heard of any companies providing insurance for green residential properties.  Such products seem to exist outside of India. In countries where demand for green certified homes are growing, there exists two broad category of schemes: one for additional environmental features such as solar panels for lighting, green materials, roof top wind turbines and for carbon offsetting schemes as an additional feature for regular insurance programmes,” says Krish Murali Eshwar, COO, BCIL Eco Homes. Incidentally outside India, green residential insurance cover comes at a higher premium thereby making green residential homes seem riskier. In reality however there is lesser risk; environmentally, health-wise, and property-wise, in buying and living in green homes. So buy insurance for your home and buy peace of mind.