Many of us are living our life on equated monthly instalments (EMI) by taking huge housing loans to build our dream home. But when it comes to insuring it, we hardly plan. However, insurance regulator IRDA now wants to change all that, reports CNBC-TV18’s Manasvi Ghelani.
"India is one of the most under-insured country in the world as non-life insurance sector has a penetration of only 0.7 per cent in the country," P Chidambaram, the Finance Minister said in his speech on September 16, 2013 in Hyderabad.
The low penetration in Indian general insurance segment got India's finance minister worried but insurance watchdog, IRDA, is ensuring they leave no stone unturned to set things right. The regulator in collaboration with General Insurance Council, is gearing up to launch widespread awareness campaigns to promote general insurance and home insurance in particular.
With need, there's room for much more in the home insurance segment. In over 200 general insurance products available in the market today, only around eight are home insurance products offered by - ICICI Lombard, TATA AIG, HDFC Ergo, United Insurance, IFFCO TOKIO Home Insurance, The New India Asssurance, Bajaj Allianz and The National Insurance Company. Reason enough why the penetration of home insurance in India remains dismally low.
"In India not even 1% of home owners have taken this policy but if u look at some of the western countries, every family will have a policy. The reason is lack of awareness," believes G Srinivasan, chairman & managing director, New India Assurance
Besides the regulators, insurance companies too are doing their bit to spread the word.
Tapan Singhal, managing director & chief executive officer, Bajaj Allianz General Insurance Co Ltd says, "We are working on our distribution partners and telling them how it can be sold and secondly we have to tell them when they are selling their other products can they talk about this also. So we are trying them to first to cross sell till it picks up and then take it on standalone basis."
Which brings us to the question, how will a home insurance policy help what will it exactly cover? The policy covers two types of home protection. First being protection against structural damages and the other cover for content damage.
Etica Wealth Management defines ‘Structural Cover’ as a cover for the structure of your home. The compensation under this cover will be paid to repair damages to the structure caused by natural and man-made calamities. The policy covers losses to the structure of the house and the contents due to any natural and man-made calamities. While content cover is for the possessions you have inside your home. If these are damaged or burgled, then the insurance covers the loss you incur for the same. The policy covers loss of jewellery, gold ornaments, silver articles and precious stones kept under lock and keys.
And this is not an expensive affair explains Nikhil Kothari, director, Etica Wealth Management. "If I am taking a 10-year contract for a Rs 60 lakh structure, it is costing me Rs 2000 per annum and for a content which is furniture and jewelry, it will cost me around Rs 13000 for five years."
One can take the policy cover of up to 10 years for structure and up to five years for contents and one need to pay premium only once.
So, if you are shelling out crores to buy you're home, you may want to consider paying a few thousand more in order to insure it too.