Home Insurance

What, Why and How Much

Need for Home Insurance

“Home is a shelter from storms – all sorts of storms.”-William J. Bennett

If we were to make a list of things that we are grateful for, home would invariably appear close to the top of the list. Home is also a financial asset whose returns keep accruing for a very long period of time. We are thus deeply invested in our homes both emotionally and financially.

Types of insurance for home are:

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Building

Covers the cost of repairing the damage caused to the physical structure of the property in the event of damage or theft. It covers everything, which could be considered a permanent part of a property. This includes the super-structure, Plinth & Foundations, Roof, Floors, Walls and any fitted or permanent fixtures.

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content

Covers for the loss, theft or damage of your furniture, electrical and ornaments, etc. inside your bungalow/flat. Most content insurance policies will only cover single items up to a certain amount. A common point of confusion is the extent to which a building’s insurance policy will protect your possessions in the event of damage. While some might assume that by insuring the building you’ve made sure that everything in it will also be covered. This is not the case.

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comprehensive or combined

Comprehensive or combined policy covers both building and content from dangers such as fire, lightning, explosions, riots, strikes, storm, cyclone, earthquake, landslide and others. It also covers content loss due to burglary or theft.

How vulnerable are we?

In recent times, we have faced a number of natural calamities that have led to wide scale destruction of properties.

If we look at 2019 alone, we had flooding and cyclone in various regions of India:

Bihar flooding – 13 districts of Bihar were impacted, affecting more than 85 lakh people
Karnataka flooding – 22 districts of Karnataka were impacted. More than 40,000 houses were damaged while more than 2,000 villages were affected.
Cyclone Fani impact in Odisha – Damage in Odisha were estimated at INR120 billion, mostly in property damage and relief. After the cyclone, Odisha required INR 170 billion for rebuilding the infrastructure

• Kerala flooding – The data from the Kerala State Disaster Management states that as many as 1,789 houses had been damaged fully while the number of partially damaged houses was 14,542

Geographical statistics of India show that almost 54% of the land is vulnerable to earthquakes. A World Bank and United Nations report shows estimates that around 200 million city dwellers in India will be exposed to storms and earthquakes by 2050.

Given such a scenario, there is a need to protect our homes and the right time to do so is NOW.

What’s the indicative cost?

To get a sense of how (in)expensive home insurance policy is consider – Building reinstatement value of INR 1 crore and Contents of INR 50 lakhs.

For a combined policy, protecting both building and content from fire and allied perils & protecting contents from theft and burglary, annual premium would be

~ INR 17,500* only

* actual premium may vary as the insurer may consider applicable discounts depending on policy duration and risk assessment