India is traditionally an under-insured nation. When it comes to home insurance, the penetration level is very dismal at 0.07 per cent. According to one survey, the demand for home insurance cover is low because the general public find home insurance products and clauses complicated and difficult to understand.
Home insurance generally comes in the form of a package that covers not only loss or damage to the insured property due to natural catastrophes or accidental damage, but also offers a host of add-on covers. Generally, householder's insurance policies cover loss or damage to building, fixtures, fittings and renovations due to fire as well as other perils such as earthquake and flood and also loss or damage due to terrorism.
It also covers loss or damage to home contents, valuables, appliances (TV, fridge, washing machine, air conditioner, laptop), and also fragile items such as plate, glass and sanitary ware. Such loss or damage can be due to fire and other perils and also due to burglary.
Some policies offer personal accident coverage, providing for payment of compensation due to accidental death and permanent total or partial disability of the insured person. There is also a cover for loss of rent if the whole house or parts of it become unfit for occupation following a fire or other perils such as flood or earthquake. Some policies also provide for payment of expenses of additional rent for alternate accommodation.
Some policies even cover accidental death or theft of pedigree pets. Loss or damage to personal baggage due to accident or misfortune while travelling in India. Accidental death or injury of domestic servants as provided for under fatal accidents act or workmens compensation act too can be covered as is any legal liability to third parties as a result of accidents occurring in the insured’s home.
Lastly, the precautions to be adopted.
While taking a home insurance policy, make sure that the property and contents are insured for an adequate amount. In the event of a claim, if it is found by the insurance company that the actual value of property and contents is higher than the insured value, claim may not be paid in full.
Secondly, home insurance policies are subject to deductibles (a nominal amount which the insured is expected to bear in the event of a claim). It is important to check with your insurance adviser on both these aspects before taking a final decision.