Protect your home against the unforeseen

Amit Bhandari

For most of us, owning a house is a dream. But, if it isn't properly insured, that dream could turn into a nightmare. It is a well-known fact that natural or man-made calamities are not timed and, therefore, cannot be anticipated.

Experts have warned that extreme events, such as Chennai or Kashmir floods of last year or the earthquake that hit Nepal and parts of India, will occur more often in future due to climatic changes. A research published in Scientific American in March 2015 has predicted that river flooding will worsen in the coming years, with the biggest calamities expected in Asia, mostly India, followed by Bangladesh and China.

Almost every year, the country's financial capital, Mumbai, faces a flood-like situation due to incessant rain. Lately, even the National Capital Region (NCR) is facing myriad of issues due to heavy rainfall and waterlogging. Cities that are situated along the banks of rivers are even more prone to such disasters. Be it the northern state of Uttarakhand or the southern parts of the country, rains wreak havoc in some form or the other.

Natural calamities often render millions homeless and many dead or injured or ill. In most cases, the losses can't be recuperated given that one has not got the necessary insurance cover. Home insurance, is the one of the most under-penetrated products in out country. 

As per statistics available, less than one per cent people have a home insurance cover. Though these policies offer cover for what is possibly an individual's costliest asset, very few are aware of its benefits and even fewer take steps to mitigate the risk of damage to their homes. There is negligible acknowledgement that fallout from such an event is not only emotionally damaging, but also has a far-reaching financial impact on an individual's life.

We need to get covered against a range of catastrophic events that could cause major damage to our home. A good home insurance product offers financial protection in case your home or its contents are damaged in an unforeseen event. The contents would include furniture, electronic goods, jewellery, costly pieces of fine art such as paintings and more, depending on the insurance cover opted for. 

There are various types of insurance policies that you can opt for your home. These range from a basic policy, which simply covers the cost of the structure of your home to those that will provide a much broader range of protection, including contents.

Some products will also provide coverage for additional living expenses, if you are temporarily unable to live in your home because of a disaster. In fact, your home insurance policy can also cover your home against burglary or theft even while you are travelling outstation for a brief period of time. 

There are many more covers, depending on the plan one opts for. As far as the premium is concerned, it will be approximately Rs 4,000 for a basic quote of the home insurance policy. This premium will cover the reinstatement cost (for dwelling/structure) up to Rs 20 lakh and a content cover of Rs 7 lakh. Jewellery will also be covered up to Rs 2 lakh, but within the sum insured of contents. This premium is for a year. However, discount is available for higher tenure policies.

It is wise to make a sincere effort at protecting our hard-earned savings and this is possible only with proper planning. While there is no denying the emotional difficulty that a person who has lost his home has to go through, a home insurance policy is a pre-requisite for property owners who wish to avoid financial losses due to weather-linked or natural disasters.

The author is Head, Health & Agricultural Insurance, Underwriting & Claims, at ICICI Lombard General Insurance