Home Insurance in India: Awareness and Importance

Posted on: Apr 12, 2021 | 3 mins | Written by: HDFC ERGO Team

Home Insurance in India: Awareness and Importance

Are people taking home insurance seriously in India? Why?

The insurance sector has seen consistent growth in India with leading drivers being life insurance, motor insurance and health insurance. One kind of insurance that people hesitate to take up is home insurance, even though it is equally necessary. Primarily because of lack of awareness. Let us learn more.

Have a look at the following facts:

Almost 60% of land in India is vulnerable to earthquakes! In 2001, Gujarat suffered a massive earthquake. Ahmedabad, the commercial capital of the state saw 50 multi-storey buildings collapse, the loss estimate being USD 7.5 billion. In the Kutch region, 2,58,000 houses were damaged. This was 90% of the housing in the district. The government declared that the total property damage in the state was over INR 100 billion. Most of the property was uninsured.
India has 7516.6 km of coastline, all of which is vulnerable to tsunamis. In 2004, the Indian Ocean region suffered a massive under-water earthquake and tsunami. The economic losses were much larger, Andaman Islands suffered as much as INR 1000 crore losses. Pondicherry and Tamil Nadu suffered losses of INR 800 crore. Most of the property was uninsured. The government had to allocate INR 200 crores under Indira Awas Yojana . Housing and Urban Development Corporation Ltd (HUDCO) came up with INR 2000 crore fund for rehabilitation. This was disbursed as subsidised loans at 6.5 per cent.

These numbers are simply mind-blowing!

How home insurance can help homeowners?

Natural disaster protection: Buying a home insurance policy will ensure that you get decent compensation if your house gets damaged in case of any natural disaster like flood, tsunami or earthquake. India has always had a history of natural disasters. The country has 68 per cent of its area at risk of drought. 12 per cent of India is vulnerable to floods. 8 per cent of the country is vulnerable to cyclones. In such a situation, the home insurance policy offers protection, which can ensure that a natural disaster does not leave you financially reeling.
Fire damage protection: Fire has been both a great friend and great enemy for people. It has made life much easier for us, but it is also one force that can reduce even bigger things to pile of ashes in a matter of hours. Fire can be caused by many causes, leaking gas, loose electric cables or electrical short circuits or in unlucky cases because of arson. Home insurance offers fire damage protection.
Protection from man-made hazards: Man-made hazards can be of many kinds and can cause considerable losses. Riots, strikes and malicious acts are a reality of life. No matter how much we try, our homes can suffer collateral damage because of events and actions over which we cannot exercise any control. Home insurance offers such damage protection.
Theft and Burglary-related compensation: In 2018, Delhi had experienced 2,49,000 criminal cases, 80 per cent of these were of theft. This was one-third of the total thefts in India that year. Having home insurance is very important because when you get home insurance, protection against theft and burglary is offered as a standard protection in the policy.
Cover for alternative living arrangements: While you are getting your house fixed after it has suffered any kind of damage covered under the policy, you will need to make an alternative living arrangement. The cost of this alternative arrangement can be quite high. Not only will you have to pay rent for the alternative location, but you would also have to pay the cost to move to the alternative location and then move back once repair work is done. All these costs are covered in the insurance policy.

In addition to these standard covers, homeowners can also purchase a number of add-ons for their property insurance policy for better cover. Key add-on covers can include:

Terrorism cover: Just like crime, terrorism is also a sad reality of life in which your person and property can suffer collateral damage. You can buy add-on cover for compensation in case your home suffers any kind of damage due to a designated terrorist activity.
Cover for jewellery and valuables: We always have a few valuables around our home. In almost all cases, people also have some kind of jewellery in their homes. You can buy an add-on cover for your home insurance policy to the tune of 20 per cent of the total insurance value for cover of jewellery and valuables at home.

Conclusion

Home insurance is an absolute must in India still many people do not buy it because of a lack of awareness. We hope that the above points made help you understand the utility of this financial instrument. A home insurance policy can help you protect your property from any man-made or natural disaster strikes! So, don’t hesitate and insure your property, today!

Disclaimer- The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales

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