Living in the dream house…….. Is it secured from the contingent losses?


India was badly hit by 2 back to back cyclones, Nisarga on Konkan area, Maharashtra and Amphan on West Bengal in the last month. Every citizen of India was horrified by the destruction done by the “Nisarga” & “Amphan” cyclones. We all have seen how the residential houses, commercial sheds were devastated. This triggered the question in my mind “How can we minimise the loss occurred by the natural or man- made calamities?” Insurance is a one word answer for this question. I started analysing the real time data for getting the answer whether people really care about taking the general insurance for natural and manmade calamities.
Chart 1: Summary of Insurance general sector – Rs. In crores

It can be observed that Motor and health insurance are playing the dominant role in type of general insurance. Generally I have also observed that common man is little bit ignorant about the home/ property insurance. He/she purchases the insurance only when bank suggests the same while processing the home loans. Most of the people do not renew when the property becomes debt free.
In this blog, I am going to write about the home insurance and its types.
Home/property insurance products are based on the type of the property. Let’s understand first types of the property and relevant insurance product for the same with the help of the following graph.

Home / Property Insurance
From the above chart, insurance cover is available for both types of structures i.e. one which is self-occupied and the other which is let out for generating the other source of income. It’s important to understand the types of calamities which are covered by the insurance companies. Definition of calamities may change as per terms and conditions prescribed by the company. In the following chart I have narrated the general conditions or situations which are classified as Natural or manmade.

Landlord Insurance gives the cover for the risk of loss due to the damage of the let out property. Some insurance companies also offer the cover for legal expenses incurred by the landlord for legal action taken in case of non-payment of the rent by the tenant.

Tenant Insurance
Tenant Insurance offers the cover for possessions of the tenants due to natural and manmade calamities as mentioned above.

In India, home insurance or landlord or tenant insurance are not mandatory like motor insurance. This has resulted into ignorance about necessity for home insurance; landlord insurance & tenant insurance. It’s essential to create awareness about home insurance among the common man.
We need to accept that insurance is financial instrument which assures some level of safety even on the rainy day. One should not think about the return on investment in such financial instruments.

So readers, is your dream home secured???

(If you are good at “Marathi” the regional language of Maharashtra, India, you can read the “Marathi” version of this Blog by clicking the link
https://managingrupaya.blogspot.com/2020/06/blog-post_13.html  



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