What Home Insurance companies Offer to Homeowners

You go on a small vacation with your friends and are looking forward to getting back to work inspired with fresh ideas and renewed energy. But you come back to smashed locks and thrashed furniture which you had purchased specially from the 1950s vintage furniture store and you notice that your TV, fridge and the savings from your locker are gone. What do you do? Who do you blame? What more could you have done? The response is, you could have insured your home. 

Research done by Insurance Regulatory Development Authority of India (IRDA) shows that only 1% of Indian homeowners have bought home insurance. The benefits of having home insurance in case of damage to property are immense. In 2013, 12,276 house thefts were registered in India, according to the National Crime Records Bureau (NCRB) . Safeguarding your home against structural damage and theft is just another way of ensuring security for your loved ones – including the home you have built with love.

Until now an uncommon practice among home owners in India, buying a home insurance is slowly gaining popularity, thanks to a range of options offered by insurance companies.  Bajaj Allianz General Insurance, for instance, provides  home security plans with covers as low as Rs 5 per day and this insures damages for a sum of up to 9 lakhs.

How do home insurance companies decide the insured area?

In most home insurance policies, the value of the area to be insured is measured according to the built up area and the prevailing property rate of the constructed area that is decided by the insurer.  So, if the area of your home is approximately 1000 sq. ft. and the rate is Rs 1500 per sq. ft., you can buy a home insurance worth Rs 15, 00, 000.

Different Home Insurance Policies

Company	Annual Premium (Rs)	Duration (Yr)	Special Conditions
Tata AIG	5,272	1	None
Bajaj Allianz	6,177	10	None
ICICI Lombard	10,360	10	Alternative accommodation not covered
New India Assurance	4,718	1	Jewelry and alternative accommodation not covered
IFFCO Tokio	8,406	1	Electronics more than five years old not covered

Basic home insurance policies available to Indian homeowners (data from www.rupeetalk.com)

The table above exhibits the basic premiums of popular home insurance companies in India. When comparing ICICI Lombard with Tata AIG, you can see that buying home insurance for long term is more beneficial than applying for an annual policy. ICICI Lombard provides home security at the annual rate of around Rs 863 whereas for Tata AIG, it is Rs 5,272. In addition to the premiums given, each insurance company stipulates specific conditions as eligibility criteria.

HDFC, a leading private bank, providing home finance, offers Section I Premium covering damage caused by fire, lightning, explosion, floods, storm and other incidents. Section II is for covering burglary and theft. The bank provides the basic requirements for home security. Other details are available on enquiry. 

            The insurance covers offered by the HDFC Premiums (Photo Credit: hdfcbank.com)

Oriental Insurance Company Ltd, a government owned insurance company, offers annual premium policies and discounts if you take a long term insurance of five to ten years. The company offers the lowest premiums in comparison to other insurance companies.

Insurance companies also offer bundled covers - for instance, Oriental Insurance provides four covers with a discount of 15% and if you choose six covers, you are offered 20% discount.

Absolutely Essential	Coverage	Asset Covered	Premium (Rs)
Damage due to natural and man-made calamities	House valued at 50 lakh	1,500
Contents valued at 10	255
Total	1,755
Important	Burglary in House	Contents valued at 10 lakh	1,000
Breakage	Glass Panes, doors and shelves worth 50,000	250
Total	1,250
Worth Adding	Break down and damage	Appliances and gadgets worth 2 lakh	400
Theft and robbery anywhere	Jewelry and valuable worth 1 lakh	800
Baggage loss during travel	Baggage worth 50,000	250
Death or injury due to accident	Life cover for 5 lakh	300
Total	1,750
Optional Covers	Damage due to terrorism	House worth 50 lakh and contents worth 10 lakh	600
Renting after damage to one house	Rent up to 6 months	2,500
Loss of rent due to damage to house	Rent of up to 6 months	200
Public liability	Compensation of up to 1 lakh payable to third party	40
Death or injury to worker	Compensation of up to 50,000 payable to worker	400
Total	5,540

  Oriental Insurance Company Premiums (Photo Credit: Economictimes.indiatimes.com)

There are many home insurance companies in the market but due to lack of awareness, few homeowners invest in it. In fact, the home insurance covers are not just for homeowners. If you stay in a rented accommodation, you could buy a cover to insure the contents of your rented accommodation and not the structure. This way, you are still partially covered if any damage occurs to the home.

Home insurance policies guarantee security and with the variety of covers in the market, you can choose your best fit to protect your valuable belongings and your home.  Buying a home insurance also means that you can go on that long due holiday without worrying about thefts and damages.