Property Insurance

Your house needs to be covered against calamities and its contents against theft and damage.

You have insured your `6 lakh car, the `50,000 laptop and even the `15,000 cell phone. Now spare a thought about the `50 lakh house. Though home insurance covers what is possibly their costliest asset, very few Indians understand this and even fewer take steps to cover the risk. No more than 30-40 lakh households in India are insured against natural calamities and other disasters. This is despite the National Disaster Management Authority estimating that 60% of the Indian landmass is prone to quakes and 8% of the country is susceptible to cyclones.

Then there are man-made calamities like fire, rioting and larceny. All these are covered by a comprehensive home insurance policy at an unbelievably low cost. The cost of insuring the structure against damage is as low as `40 per `1 lakh. Keep in mind that you don't need to insure the house for the value of the property but only for the cost of reconstructing it.The costs can vary from `1,800 per sq ft for a basic no-frills structure to `3,000 per sq ft for a premium construction. So, a 1,000 sq ft house should be insured for `18-30 lakh and the cost will be `8002,400 a year.

You can buy a fire and other perils policy as a standalone cover, but most insurance companies encourage buyers to go for a comprehensive plan that covers a wide range of risks. It's advisable to enlarge the cover a bit.

A fire or a flood may not damage the structure, but will ruin everything else inside the house. So you also need to insure the contents of the house against the damage. The cost of insuring contents worth `10 lakh against natural and manmade calamities is just `255 a year. Then come the covers against burglary and breakage. These are also important and will not cost too much.You can enhance the coverage if you perceive a risk, and if your pocket allows.

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