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Securing your home

Why is home insurance such an alien concept to Indians? SHANTHI KANNAN reports



Protect your property:Home insurance is a cover that offers various protections, including losses to one's home and its contents.

Back from a fortnight's holiday, Ajay had the shock of his life when he arrived home. His house had been burgled and many of his valuables were missing.

The irony? While the 35-year-old executive and his family were medically insured for the vacation and their baggage covered for loss or misplacement in transit, he had done nothing about his home.

It's not a familiar story, one that reveals a truth about Indians and insurance. While they are more than willing to insure their lives, their health, and their risks while doing business, they rarely insure their homes against such things as theft, fire or natural calamities.

The theft had wiped a considerable part of Ajay's savings — not to mention the pleasures of the trip — clean. Had he taken out home insurance, he would have recovered a considerable part of the money he had invested in household assets. Home insurance, also referred to as hazard insurance or homeowner's insurance, is a type of property insurance that covers private homes. It is a cover that offers various protections, including losses to one's home and its contents. Why is it necessary? “Insuring one's property and assets is a necessity today. Given the growing number of amenities and possessions in an average household today, it is necessary to safeguard them and protect safeguard the money invested in them,” says S. Shivakumar, Senior Vice President, Marketing and New Initiative, Chola MS (Cholamandalam MS General Insurance Company Ltd.). Mr. Shivakumar blames the low penetration level of home insurance on due to the lack of awareness. Many customers are not aware of the availability of home insurance products. The few who are aware, he suggests, are unwilling to buy home insurance because they believe it is a cumbersome process (extensive documentation and calculations). However, with the nuclearisation of families and the orchestrated campaigns promoting home insurance, the concept is slowly gaining acceptance, he adds.

Today, most insurance companies do cover the building, personal belongings (such as domestic appliances and jewellery) and family (such as reimbursement for accident-related treatment, additional rent for alternate accommodation, and workmen's compensation). Cover is also available for people staying in rented houses.

The significant increase in the residential property segment has not been matched by a growing popularity for home insurance. A combination of factors is responsible for this. Apart from the lack of awareness among individuals, housing finance companies have shown displayed a marked lack of interest in promoting home insurance along with home loans. Taking effective steps to package home insurance products along with along with property loans will go a long way towards promoting awareness about the former.

Today, the major chunk of the insurance business comes from vehicle insurance. This is followed by life insurance. The size of the home insurance market in India is estimated at a relatively small Rs. 800 crore to Rs. 900 crore, which is less than two per cent of the overall general insurance premium.

What about builders? Are they willing to promote home insurance along with the sale of flats? ``Yes,'' says S. Ramakrishnan, Chief Executive Officer, Marg ProperTies. Of late, a few real estate developers have started offering home insurance as part of the sale package of every apartment. The number is very small but it is hoped that others will adopt this practice sooner or later. The fact that most customers nowadays opt for housing loans has had a positive spin-off since banking institutions have begun to press for home insurance. Unfortunately, there is no law which makes this mandatory, says Mr. Ramakrishnan.

With the mushrooming of multi-storied apartment blocks, can builders and insurance companies look at group insurance? According to Mr. Ramakrishnan, group insurance will take a long while to fructify. Senior officials from But United India Insurance Company say that a householder policy is not conducive to being brought under group insurance since each family has a different profile (assets, number of members, etc).

“But we do have a policy that can be tailored to suit the requirements of a heterogeneous group of persons/families.”

In short, we still have a long way to go before home insurance becomes mandatory as in many countries in the West.

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