|Rediff India Abroad Home | All the sections|
All about home insurance
Bridget S Leena, Outlook Money | November 23, 2006
I shell out just Rs 10 every day to cover the valuables of my home." This was the quick response of Viswanathan Iyer, when asked why he took a home insurance. His residence has had a cover for the last five years. Iyer says: "I own a house in Mulund West, Mumbai, and have insured it - including valuables such as jewellery, television and other electronic items in the house - or Rs 20 lakh (Rs 2 million). My premium payout is Rs 3,240 a year."
Everyone would recall the deluge that wrecked Mumbai on 26 July last year. It is interesting to note that while motor claims were piling up, insurance industry says, claims for home insurance were few and far between.
Most insurers say there has not been any drastic increase in the number of people taking home insurance this year, despite the experiences of the past year, and its penetration is still very small. Insurance Regulatory and Development Authority chairman C S Rao points out that the awareness about taking home insurance is low compared to life insurance and health cover. Most people don't know that the premium to be paid is considerably small for the value insured.
Does your home need insurance?
If your answer is yes for the following questions, then you would probably require an insurance cover for your home.
Though Iyer has not made any claims, he continues to renew his policy every year. The 40-year-old man's line of reasoning is that with hard work he managed to build a home and acquire valuables, the loss or damage of which will be large. "I see it as Rs 10 a day, less than the minimum auto rickshaw fare. I earn over Rs 10 lakh a year and the premium payout is a small fraction of my income," he says.
If you are wondering why, despite its benefits, your agent is not pushing for a home insurance, here's your answer: the premiums are small and so are the commissions. And commission largely drives agents.
S S Gopala Rathnam, president (operations) Cholamandalam MS General Insurance, says the agent feels there is an opportunity loss in selling home insurance. He would rather choose to sell a cover that fetches him more returns. In fact, agents usually insist that customers choose more segments under the home cover so that the ticket size increases and becomes attractive for them. Enhanced cover also ensures discount for the customer.
What can be covered
Home insurance can cover losses to the structure and contents of your home from any natural or man-made calamity. The disasters that can be insured against are fire, earthquakes, storms, cyclones, tempests, tornadoes, hurricanes, floods or inundation, lightning strike, explosion, landslides, impact by vehicles or aircraft, and bursting or overflowing of water tanks and pipes.
Burglary cover. Loss due to burglary or an attempted robbery of valuables such as jewellery and silverware can also be covered.
Benefits of taking home insurance
Cost of premium is small. The cost of the insurance premium in comparison with the value and cost of the structure and contents, domestic and electronic appliances, is less than one per cent.
Policy covers a range of segments. Home insurance covers almost all kinds of catastrophic risks, from damages arising from terrorist attacks to breakdowns of water tanks. The choice is yours - if you think your home is not going to be damaged by a terrorist attack, you don't need to cover it. In case you are living in a rented house, you can choose to insure only the contents.
Covers cost of temporary shelter. In case of fire or damage to your home, which makes it unlivable, the cost of temporary rental for six months not exceeding Rs 1 lakh will be covered.
Buy it online. It is simple and easy to buy home insurance. You can buy it online as well. Just log on to any of insurance companies' websites and fill the necessary details to buy a policy.
How to claim