Your Money: Home insurance to keep the roof over your head

By Tushar Chatterjee

Indians spend their savings over a lifetime to buy a house and equip it with appliances, furniture, etc. However, less than 1% of them have any kind of home insurance. In terms of value, less than 2% of the business of non-life insurers comes from home insurance.

In the absence of climate risk insurance, natural catastrophic bonds, etc., home insurance is the only cover which can provide some decent compensation to people whose properties are destroyed as a result of a natural calamity or acts of vandalism. In case a house property is damaged beyond repairs and the policyholder has to relocate to a different location, home insurance has such add-ons like resettlement cover to enable him to settle down at the new place without incurring additional expenses. If a guest, while staying in the premises of the policyholder, is injured, then all expenses related to medical treatment are reimbursed under a home insurance policy, known as Public Liability Coverage. Even tenants are eligible to get home insurance cover.

Bharat Griha Raksha
Bharat Griha Raksha (BGR) is an initiative by Irdai to promote home insurance through all non-life insurers. The annual premium can be as low as Rs 250 for a sum assured of Rs 1 lakh. In case of any loss or destruction of the property, the insurer reimburses the market value of the property as on the date of the loss, not as on the date of purchasing the insurance cover. So, there will never be underinsurance. In fact, sum assured will automatically increase if a long-term policy is purchased. There is also default coverage of the contents of the homes to the extent of 20% of the sum assured. However, this policy is not getting a large number of takers as insurers do not promote this product in a big way.

Home sensors
Home insurance is considered as a ‘negative Rrinforcement’ product as people still consider house property as something that will always remain as the most valuable security. If home sensors are attached with home insurance policies, the home owners will get to know better ways to preserve their properties.

The premiums can also commensurate with the risks facing a household. In developed markets, the focus is more on prevention of the risky events. In case the home or any appliances require urgent repairs, the insurers also arrange for it.

The writer is an insurance industry analyst