Why home insurance has become a must today – All you need to know

Updated: September 17, 2018 3:59 PM

Although the government does its best to provide economic help to the people during a natural disaster like Kerela floods, a proper financial planning certainly lowers the financial burden.

home insurance, kerala floods, gujarat earthquake, home insurance india, home insurance premium calculator, home insurance add ons Home Insurance: A key learning for people residing in or around natural disaster-prone areas would be to get their home or property insured.

Every natural disaster leaves behind a massive trail of huge destruction to life and property. Be it the recent Chennai floods that claimed a total loss of over 9,500 crore, or the 2013 North India floods that reported a loss of 15,000 crore, the trend remains almost the same. Unfortunately, the frequency of natural disasters in India has increased drastically in the last 10 years and the losses from natural calamities are said to have reached over billions of dollars. As per a recent World Bank estimate, one-third of India’s over 600 districts are hazard-prone, directly placing about half the nation’s economy potentially at great risk. Much more than the economy, it’s the property worth millions and the lives of people which remain at utter stake.

The Need for Home Insurance

It is not always possible to measure the extent of damages that any natural calamity entails in terms of money, but people who carefully secure their financial future by the right insurance cover in place certainly feel better off. However, the trends clearly indicate that people have failed to learn from their past mistakes. As per industry estimates, of the total economic losses after most natural calamities post the 2001 Gujarat earthquake, only 10% were insured losses.

One thing that we, as responsible citizens, need to understand is that though the government does its best to provide economic help to the people during a natural disaster, a proper financial planning certainly lowers the financial burden. A key learning for people residing in or around natural disaster-prone areas would be to get their home or property insured. Moreover, the numerous insurance companies operating in the market today have sufficient policies to cover your home against all natural calamities. As per industry insiders, we need to see home insurance as a very valuable product.

What All It Covers?

Under a comprehensive home insurance policy, though the insurer will not pay you for the regular wear and tear of your house, it will certainly pay you for any damage caused by natural calamity including flood, earthquake, cyclone, etc. With the weather patterns becoming significantly unpredictable, it is smart to get an adequate cover for your house. Do remember, it is not just important to have a policy for the structure, but it is equally important to have an adequate insurance for other contents of the house as well including furniture, fixtures, electrical and mechanical appliances.

Apart from providing cover against natural calamities, a home insurance policy even covers your home against damage due to burglary, fire and allied perils, electrical mechanical breakdown of electrical and robbery. Many insurers including New India Assurance, Shriram General Insurance and Bajaj Allianz even provide cover against the acts of terrorism.

Important Add-ons to Consider

Just like health, life and motor insurance, home insurance also gives its potential customers the prerogative of buying add-on covers in order to enhance their policy cover. Most of the add-ons are most relevant to cover situations arising from natural calamities like floods, cyclone, and earthquakes. Some prominent options available include expenses for temporary resettlement and additional rent for alternative accommodation. Both these plans play a major part in helping people to start their lives afresh.

Many insurers such as Bajaj Allianz and Shriram General Insurance have even introduced add-on covers that claim to insure your jewellery and important valuables, personal electronic appliances, domestic appliances, personal accident cover, public liability, etc.

Cost of Home Insurance

Contrary to the general perception of people that home insurance is a very expensive product, home insurance comes at significantly cheap prices. The average annual premium for insuring a house worth Rs 50 lakh in a metro comes for as low as Rs 2000 – Rs 2500. However, a detailed home insurance policy covering your home worth Rs 50 lakh along with its added contents (furniture, home appliances, etc.) worth Rs 5 – Rs 7 lakh would cost you an annual premium of Rs 5,000 to Rs 7,000. For maximum customer satisfaction, the new age insurance companies offer home insurance cover with minimum documentation.

Below is the example of premiums of various home insurance companies in India for 1 year cover, value of building is Rs 50 lakh and value of content is Rs 10 lakh:

Plan Name

Bajaj Allianz (Standard Fire and Allied Perils)

Royal Sundaram (Gruh Suraksha) 

New India Assurance (Greh Surakhsa  )

Cholamandalam (Fire and Special Perils Plan) 

Premium (Structure Only)

2666

3150

N/A

NA

Premium (Content Only)

9184

4537

7075

7075

Premium (Structure + Content)

11850

7687

7075

10084

Source: www.policybazaar.com

(By Tarun Mathur, Chief Business Offer-General Insurance, Policybazaar.com)

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