Home insurance plans in India compared

Thursday, March 17, 2011, 7:23 by Business Editor

Home insurance is on everyone’s mind right now, thanks to the catastrophe in Japan. We compare the top home insurance plans in India

Remember the tragic collapse of residential buildings (thanks to the shoddy work of the concerned developers) not too long ago in Delhi and Mumbai that claimed the lives of dozens? If that doesn’t ring a bell, then the calamitous earthquake and Tsunami that have ravaged Japan surely would be fresh in your memory. In both these cases, surviving families without any insurance cover for their homes would unfortunately have had a harrowing experience–in terms of having to cope with the aftermath of the catastrophe.

While we can hardly predict disasters, be it natural or man-made (burglary for instance), one thing surely within our grasp is for us to hedge ourselves against the risk of the occurrence of such events. And that’s where home insurance–also, known as homeowner’s insurance, or hazard insurance– plans can come in really handy.

There are broadly two types of home insurance plans in India: Building insurance plans and content insurance plans

Basically, these plans are similar to vanilla ‘term life insurance’ policies, providing a pure risk cover–in return for a pretty negligible annual premium–against financial loss on account of damage to your home and/or contents of your home caused by man-made and unforeseen natural incidents. Some of the leading vendors in this space include New India Assurance Co., Oriental Insurance, United India Insurance, ICICI Lombard and Bajaj Allianz. Some insurers allow you to purchase home insurance plans online, whereas others do it on ‘in-personal visit basis’.

Types of home insurance in India

There are broadly two types of home insurance plans, which can be purchased in combination or on a standalone basis –

Building insurance plans in India

This plan insures the building structure of your house for its reconstruction value, i.e. the amount of money needed to reconstruct the home from scratch.

A thumb rule to estimate this expense is the area of your house multiplied by the rate of construction per sq. feet. So for example, if one has a 500 sq. feet house and the rate of construction is Rs. 1,000, then the Sum Assured (SA) would be Rs. 5,00,000.

Building insurance plans provide protection for both natural and man-made perils, a few of which we have shortlisted below –

Natural disasters – Fire due to short circuit, earthquake, lightening, storm, floods, landslide

Man-made calamities – gas cylinder explosion, bursting of water tanks, aircraft damage, riot, strike, malicious and terrorism damage, missile testing operations

Content insurance plans in India

This plan protects your valuable personal property such as refrigerator, camera, washing machine, stereo, computer equipment, jewellery, etc. In case of damage (electrical and mechanical breakdown) to any of these items, the insurer will pay you the cost of purchasing the same minus the depreciation for usage.

In other words, the domestic appliances are covered, based on their market value. You will get a fixed quote for the ‘Sum Assured’ figure for each typical household item at the time of buying the policy.

Content insurance plans cover several perils including fire, floods, storms, explosions, vandalism and theft, as well as various types of accidental breakage of plate glass fixed in doors and window frames.

If you are living in a rented house, we would suggest you to go in for a pure-play content insurance plan.

Sample case

To help you get a tangible sense of the typical costs associated with these two types of home insurance plans, the following tables depict a sample case, capturing the ‘Sum Assured’ and premium amounts for both building and content insurance.

Type of building insurance Sum Assured (in Rs.) Annual premium (in Rs.) Gross annual premium (in Rs.)
Fire & Allied Perils 1000000 600 675
Rent for alternative accommodation 15000 75
Type of content insurance Sum Assured (in Rs.) Annual premium (in Rs.) Gross annual premium (in Rs.)
Fire & Allied Perils 300000 180 1920
Burglary with sub limit jewellery 200000 720
TV breakdown 20000 300
DVD player breakdown 4000 60
Refrigerator breakdown 10000 75
Music System breakdown 20000 300
Washing Machine breakdown 10000 75
Microwave breakdown 8000 60
Purchase Protection 30000 150

Hence, total gross annual premium for insuring both the building (if you own the house) and its contents comes in at Rs. 675 + Rs. 1920 = Rs. 2595. And if one includes a Service Tax of 10.3%, then the net annual premium is a pretty affordable Rs. 2862.

Policy tenure

Home insurance plans are usually term contracts, having a tenure of between 1 year to a maximum of 15 years. Based on the term chosen by you, the insurer would vary the requisite premium amount.

Typical exclusions

As is the case with all types (health, life, auto, etc.) of insurance plans, home insurance plans, too, come with a set of exclusions under which the insurer won’t reimburse your for the damage or loss of your house and/or personal property. Here are some of the standard ones –

  • Houses over 50 years old are generally not covered under building insurance. If covered, you can expect a higher premium. Moreover, insurers consider only ‘Pukka/Permanent’ construction.
  • Electronics items more than 10 years old do not come under the purview of content insurance.
  • Building insurance is not provided if the house is being used for any type of business activity–one has to buy merchant insurance in that case.
  • Burglary involving the house maid is not covered under content insurance. Also, if you carry your jewellery out of home and there they are stolen, they would not be covered.

Buying options

What options, then, does one have if he wants to buy a home insurance plan? We’ve handpicked four policies currently available in the Indian market to make this shortlisting task easier for you. All the following schemes, by and large, cover the afore-mentioned risks with regard to building and content insurance.

Oriental Insurance SWEET HOME INSURANCE

Oriental Insurance’s ‘SWEET HOME INSURANCE’ plan is available to any individual,
including overseas nationals owning property in India, as long as the building proposed for insurance is located within the Indian territory.

The USP of this policy is that the insured need not go through the hassles of having to furnish the details of the household contents with the company, barring for the articles for which protection is applied for in case of electrical/mechanical breakdown.

Oriental Insurance SWEET HOME INSURANCE’s USP: need not go through the hassles of having to furnish the details of the household contents with the company

The ‘SWEET HOME INSURANCE’ scheme comes with three plans–A, B, & C –with each plan having five sections. Section I, covering your building against Fire and Allied perils, is optional, and the proposer is given the flexibility of selecting among Rs.4, 6 and 8 lakhs under Plan A, B, & C respectively.

The remaining four sections, covering insurance for contents and Personal Accident, are compulsory.

Here is a list of the benefits and the corresponding premium amounts under the policy –

Section Cover Value of the insurable property as declared by the proposer (In Rs.)
Plan A Plan B Plan C
I

(Optional)

Dwelling House against Fire and Allied Perils including earthquake (15% cushioning on S.I) 400,000/-

Fixed

Pr.Rs.240/-

600,000/-

Fixed

Pr.Rs.360/-

800,000/-

Fixed

Pr.Rs.480/-

II

(On first loss

basis)

100% basis

Specified household contents (excluding jewellery)

Individual item limit 10% of Sum Assured

1,00,000/-

Fixed (S.A. including Machinery Breakdown section)

Pr.Rs.60/-

2,00,000/-

Fixed

(S.A. including Machinery Breakdown section)

Pr.Rs.120/-

3,00,000/-

Fixed

(S.A. including

Machinery Breakdown section)

Pr.Rs.180/-

III

(On first loss

basis)

100% basis

Burglary & House breaking  excluding theft and larceny  for contents in the above dwelling (excluding jewellery)

Individual item limit 10% of S.A.

1,00,000/-

(S.I .including

Machinery Breakdown section)

r.Rs.43/-

2,00,000/-

(S.A. including

Machinery Breakdown section)

Pr.Rs.86/-

3,00,000/-

(S.A. including

Machinery Breakdown section)

Pr.Rs.129/-

IV

Electrical/

Electronic

gadgets

Machinery Breakdown section for items (not less than Rs. 1,000/-) described in the schedule and installed/lying in above dwelling. Excess 1% of S.A. or Min.Rs.250/-(Item less than Rs.1000/- not covered). Up to 30,000/-

Pr.Rs.64/-

Up to 50,000/-

Pr.Rs.108/-

Up to 70,000/-

Pr.Rs.151/-

V

Personal

Accident

Personal Accident Insurance on floater basis amongst insured and spouse .Benefits Table I-A (Death, loss of limbs & P.T.D)  Age limit:18 to 70 years 2,00,000/-

Pr.Rs.136/-

2,00,000/-

Pr.Rs.136/-

2,00,000/-

Pr.Rs.136/-

Schedule of Premium (in Rupees), Service Tax Extra.

PLAN-A               PLAN-B              PLAN-C

Selected % of

Full value

cover

Charging % of full

Value premium under

Section II& III

Without

Building

cover

With

Building

cover

Without

Building

cover

With

Building

Cover

Without

Building

cover

With

Building

cover

Unto 25% 50% of Rs.1.03/-per mille 253/- 493/- 347/- 707/– 442/- 922/-
Up to 50% 70% of Rs.1.03/-per mille 272/- 512/- 388/- 748/- 503/- 983/-
Up to 65% 85% of Rs.1.03/-per mille 288/- 528/- 419/- 779/- 550/- 1030/-
Up to 75% 90% of Rs.1.03/-per mille 293/- 533/- 429/- 789/- 565/- 1040/-
Beyond 75% Rs1.03/-per mille 303/- 543/- 450/- 810/- 596/- 1076/-

United India Insurance House Holder’s Policy

The ‘House Holder’s Policy’ from the government-controlled United India Insurance, one of the four top non-life insurers in the country, has a tenure of 1 year.

Apart from covering the afore-mentioned risks under both building and content insurance, this homeowner’s protection plan insures against personal effects or the loss of baggage during travel.

Another highlight of the policy is that it provides ‘Personal Accident’ cover for the insured & his family members.

You can calculate the premium amount, based on your household content and building cost, at http://www.uiic.co.in/premiumcalc.jsp. The policy can be renewed by visiting any branch of United India Insurance before the date of lapse of the plan.

Bajaj Allianz Easy Householders Package Policy

The ‘Easy Householders Package Policy’ from Bajaj Allianz, a joint venture between Bajaj Group and German insurance giant Allianz, offers the three following plans for you to select from:

Coverage Plan I Sum Assured (in Rs.) Plan II Sum Assured (in Rs.) Plan III Sum Assured (in Rs.)
Fire and Allied Perils: Contents 1,00,000 2,00,000 4,00,000
Burglary and Theft 1,00,000 2,00,000 4,00,000
Breakdown of Domestic

Appliances (excluding A.C.)

25,000 30,000 50,000
Electronic Equipments 25,000 30,000 50,000
Baggage 2,500 5,000 7,500
Total Premium (excluding service tax) 589 934 1732

Some of the other significant exclusions under this policy include loss or damage to the premises or contents caused by depreciation or wear and tear, as well as loss or damage to communication devices such as mobile phones.

New India Assurance householder insurance policy

On top of providing protection vis-à-vis the risks of ‘Fire & Allied Perils’ and ‘Burglary & House Breaking’, New India Assurance’s householder insurance policy covers ‘Personal Accident’.

So, in the event of the unfortunate death of the insured or him suffering bodily injury by accidental, violent, external and visible means, the company will pay a ‘Sum Assured’ amount not exceeding 72 months’ salary from gainful employment.

Other key features Baggage Insurance and Public Liability, which covers the insured individual’s legal liability for physical injury or loss of or damage to property of third party.

While one has the option of choosing a set of any of the 10 coverage options (http://www.newindia.co.in/per-house.asp) provided under the policy, it is mandatory for the insured person to select Section IB of the plan which insures the household contents of the proposer. Plus, you have to take at least three sections in order to buy this policy.

New India Assurance offers discount in premium, subject to number of sections opted for by the proposer.

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