The Hindu Business Line : Is your ‘sweet home’ also a ‘safe-home’?

Do you remember a single day without the newspapers reporting some burglary or chain-snatching incident in your city? Not to forget, the numerous gas cylinder explosion cases and freak fire accidents due to short circuits or bad wiring! Every time we see such a news item, we shrug and turn the page — it has become so common that it doesn’t hurt any longer (much like innocents dying in Kashmir or people being run over by Blue Line buses in Delhi). But let’s just pause for a second and think of the victim’s plight — the financial loss, the police follow up, the trauma of using up savings or borrowing money to start all over again….

What if this happens to your family? Are you financially strong enough to take such shocks? Is there any protection?

Well, there is protection! While you may not be able to prevent a burglary or fire happening in your building (let’s face it: disasters will happen, despite all precautions), you can sit pretty in such situations if you have a householder’s insurance policy tucked away somewhere (may be unread though!)

Householders insurance?

If you don’t know much about householders Insurance, don’t worry! You are not alone. Despite India’s housing sector being on a growth path and houses being constructed in record numbers, the awareness and penetration of this policy are abysmally low. To be fair, building insurance has grown at a healthy rate in recent times, thanks to financiers’ insistence, but the same is not true of the contents.

Householder’s insurance is a ‘package’ policy, which protects your home against several risks — or perils, as they are referred to in insurance jargon — in a single policy. Normally you would need separate policies for each of these perils. The perils covered are fire, including floods, cyclone, lightning, explosion, riots, strikes, burglary, damage to electrical & electronic equipment due to breakdowns/short circuits and even accidental injury to your family members or even your driver/maid-servant.

The policy addresses the building (for fire & other risks) and its contents (for fire and other risks, burglary, break down etc) separately. Contents include almost all your worldly possessions at home — TV, refrigerator, microwave, PC, furniture, clothes, books etc — including your jewellery. Almost all the general insurance companies offer the policy.

And, at what cost?

Well, you would be surprised! A Rs 20-lakh apartment with contents of around Rs 4 lakh (including jewellery of Rs 1 lakh) would cost you less than Rs 4,000 — around Rs 11 per day (equal to 3 cups of tea; or 1 bottle of your favourite cola). In spite of the cost being so low, the penetration is so weak that when Gujarat was rocked by earthquakes or Mumbaikars were floating in neck deep water, although insurers opened special counters to cater to the victims’ claims, several lakh homeowners had to re-build their lives on their own as they had no policies to protect them.

It won’t happen to me

One reason for this could be the lack of both ‘pus’ and ‘pull’. Lack of promotional ‘push’ by insurers companies — it’s a low premium product, there can be large claims from the breakdown of electrical appliances and they end up processing numerous petty claims too.

Lack of customer pull is because many of us live in a state of denial — we prefer to bury our heads like ostriches (cancer, HIV & burglaries happen to others — never to me). We don’t like insurance because, like planning for our own funerals, we have to think about several unpleasant ‘what-ifs’. Another reason is the painful process of filling up a proposal form. Well, ‘no pain no gain’. Honestly, it would not take more than a couple of hours to list out your contents if you decide to take a policy. But we choose to keep it for ‘tomorrow’ to complete the task of filling the proposal form.

Some tips

Pre-underwritten policies: Realising the trouble involved in compiling the list of contents, some private insurers have now come up with pre-underwritten policies. Here, you are permitted to select a sum insured between 1 lakh and 10 lakh (in multiples of 1 lakh) for your contents, without providing a detailed break up. Valuation of your building & contents. Excess valuation means excess premium paid without corresponding benefit; under valuation will lead to partial claim settlement. (Note: the land component of your building cost need not be insured)

Always remember to preserve the bills for your more expensive items, as they will be required by the insurer if there is a claim.

Better safe than sorry

Protecting your home from the slings and arrows of natural and man-made disasters is very important. In recent times we have seen what havoc an earthquake or any other natural calamity such as floods, landslides and torrential rains can cause. Your home typically is the single biggest investment you’ll ever make in your lifetime and by protecting it with householder’s insurance, you will have financial protection against the unexpected.

It’s a choice you make! So, don’t leave it to chance!

(The writer is Chairman, India Insure Risk Management and Insurance Broking Services. The views expressed are personal and not that of the organisation)

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