Why family insurance is your protecting defend in opposition to the fad of nature – BusinessLine

Until a few years ago, home contents insurance was primarily linked to protection against fire, burglary or earthquakes. But as nature's rage unfolds in coastal and other rain-prone areas of the country, incessant rains, floods, and storms seem like a huge risk.

If the predictions of climate change are correct, the risk should manifest itself more frequently in future generations. General insurers faced Yen 4,800 billion in losses due to the 2015 floods in Tamil Nadu, mainly from auto and home insurance. Claims from the recent floods in late 2021 have not yet surfaced. Similarly, Uttarakhand faced similar anger in 2013 and 2021. In this scenario, home insurance could become a necessary purchase for most.

Inclusions and exclusions

Household insurance broadly covers three different assets – buildings, household effects, and a combination of the two that will appeal to either homeowners or tenants. Content generally refers to furniture and other immovable objects like televisions, air conditioners, and even desktop computers. It is important to note that portable electronics and valuables do not automatically fall into the content area. Building or structure refers to the physical units and makes up the largest part of the sum insured. Content coverage is either a percentage of building coverage or is provided when content is disclosed.

Most home insurance policies offer protection against risks that can be broken down into natural and man-made risks. Natural risks from earthquakes, fire, floods, storms and floods as well as landslides are insured for both buildings and contents. Man-made disasters, including civil civil unrest and malicious damage, and terrorist activities as specified in India's Criminal Code are covered. The general exclusions across all policies cover the obvious terms of self-harm, unmaintained property, pre-existing damage, loss from wear and tear, and damage to property by order of a government agency or court. Some of the less obvious exclusions to be aware of include seepage losses (from water seepage), electrical appliance failure, war, rodent damage, and home business-related appliances. Cash stored at home is also excluded. Jewelry and wearable devices are insured as additional or nominal amounts.

Bharat Griha Raksha was introduced by IRDAI in April 2021, standardized household insurance that all general insurers should offer. The policy differs from other custom products in two main ways. Household contents are insured for up to 20 percent of the sum insured without any obligation to disclose within the scope of fully comprehensive insurance (building and household effects). The policy also prohibits proportional claims processing, whereby the claims paid out to the amount claimed are in the same proportion as the sum insured to the property value. There is coverage for jewelry and other valuables as well as content coverage of more than 20 percent when the asset and its value are disclosed. This cover is offered for an additional premium.

Product price

For a home insurance coverage of 1 crore and a content coverage of 5 lakh (excluding jewelry and wearable electronics), the annual premiums would be between 4,000 and 5,000 per year (for PIN code in Chennai) compared to the price range of Bharat Griha Raksha of ₹ 2,000- ₹ 5,000. Iffco-Tokyo’s comprehensive plan for the same parameters would calculate 4,062 yen per year. Here, only jewelry up to 50,000 yen is insured for a small surcharge, while wearable electronics up to 50,000 yen would increase the annual premium by 330 yen. HDFC Ergo's comprehensive insurance has a premium of ₹ 4,883 per year, but also includes alternative accommodation and other emergency benefits. The terms include a deduction of 5,000 for each registered claim. Electronics protection capped at 1.5 lakh costs an additional 2,250 and ₹ 1 lakh jewelry protection costs an additional ₹ 800 per year. Go Digit General Insurance offers jewelry protection of up to 20 percent of the content protection, or ₹ 5 lakh, whichever is lower, for an annual premium of ₹ 4,119 (for the same building coverage of ₹ 1 billion and one on ₹ upfront specified content protection 10 lakh).

The prices in Bharat Griha Raksha (see table) vary depending on the service, pricing, claims processing and resolvability, even if the basic structure is the same in all companies.

Other factors

In the event of a break-in, claims for most policies must be filed as soon as possible (7 days for Bharat Griha Raksha). Jewelry insurance is best covered by specialized insurance, as home contents insurance may not be sufficient to cover valuables over ₹ 2 lakh that are kept at home. The rewards are heavily dependent on PIN codes, so the rewards rates can vary significantly even within the same city. Some policies also deny insurance for homes that have been hit by a flood in the past five years. The premiums will also be lower when security features like surveillance cameras and 24-hour security guards are available.

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