Home Insurance concept yet to pick up despite repeated floods in Chennai

Chennai and its neighbourhood have seen two major floods in a span of eight years (from 2015 to 2023), with heavy waterlogging in apartments and individual homes in several localities. Despite this, home insurance – which helps cover the building as well the contents of the home from floods – has not picked up.

The non-life insurance industry in India is mainly led by health and motor insurance. “Home insurance is a small component of the non-life insurance industry, accounting for less than 5% of the total premiums,” said Srabasti Dhali, vice president and national manager, PCG & Home, TATA AIG General Insurance.

Lack of awareness is a major factor for the lower penetration of home insurance. In India, insurance is generally seen as complex product and home insurance, a more complex product, she said.

You can buy a multi-year home insurance policy for up to 10 years. A long-term policy helps take care of the inflation cost and avoid hassles. The owner or somebody who is legally liable for the property should take that insurance, Ms. Dhali added. If you are living in a rented place, you can take insurance to cover the contents of the home, she added.

The Insurance Regulatory and Development Authority of India had directed all general insurance companies to launch a standard home insurance policy, The Bharat Griha Raksha policy, from April 1, 2021. It runs for a period of up to 10 years. The unique feature of this product is that besides the building, there is also an automatic cover for the contents, up to 20% of the value that the building is insured for, said Suryanarayanan, managing director, Cholamandalam MS, a joint venture between Murugappa Group and Japan’s Mitsui Sumitomo insurance group. In the last seven to eight years, lending institutions would have insisted home loan-borrowers to take an insurance cover for the building. The cover for contents of the home would have come from April 2021, he added.

Mr. Suryanarayanan pointed out that under Centre’s affordable housing scheme, value of the house ranges from ₹15 lakh to ₹25 lakh. If the home is insured for ₹15 lakh, there is an automatic cover for general contents, such as white and brown goods in a typical home. The only catch is that the customer should have opted for general contents.

Hence, in the current situation, if the standard insurance product had been taken, 20% of the content would have been covered in insurance, he said. One can also avail of a cover beyond 20% by paying an additional premium. There is no need for any declaration for 20% cover, but beyond it, a declaration of value of contents such as television or refrigerator needs to be made, Mr. Suryanarayanan said.

He pointed out that the rain would have caused water marks on the walls, and home insurance covers for painting charges as well.

Premiums on home insurance varies based on geography, the type of apartment or individual house and range from ₹25 to ₹40 per lakh per annum. Home insurance is very much affordable..., Mr. Suryanarayanan added.