Skip to main content

General insurance products COVER STORY

Most general insurance products in the market today have sufficient cover for all kinds of perils that arise out of force majeure and natural calamities.
CYCLONE Nargis. Hurricane Mitch. The Asian tsunami. Gujarat and Pakistan earthquakes. The Mumbai deluge. And now the Bihar floods. True, despite mankind’s best efforts to make the world a better place to live in, there’s little escape from nature’s fury which sometimes not only leaves thousands dead but renders millions homeless as well.

Worse, natural catastrophes are striking with greater frequency today than at any time in recent memory. For instance, in the past decade alone, the direct losses from natural disasters are said to have reached a $1 trillion, 20 times higher than five decades earlier. And by one World Bank estimate, one third of India’s 603 districts are today hazard prone, placing about half the country’s economy potentially at risk. However, more than economy, it’s the lives and properties of millions and millions of people which are at stake and need protection from natural disasters. It goes without saying that the loss of human life can never be compensated, but the financial shocks from unforeseen eventualities can easily be absorbed just by taking adequate and the right insurance.

The good news is that most of the general insurance products being offered in the market today have sufficient cover for all kinds of perils that arise out of force majeureand natural calamities. So whether it’s flood, earthquake, storm, cyclone, fire or riots, among others, there’s cover for all. Thus, while individuals can protect their homes, self and vehicles by taking householder’s insurance, personal accident policy and motor insurance, respectively, fire and project insurance with earthquake extension may be a suitable option for business houses. Similarly, while shopkeepers insurance policy can be taken to protect one’s shop, villagers can take weather or crop insurance to protect their crops.

Of all these, householder’s insurance is the best bet to safeguard the most valuable asset of your life — your house — because it not only covers the structure of your home but also all its valuable contents from different kinds of perils such as earthquake, terrorism, flood, burglary and house-breaking.

Coverage for structures and buildings, for instance, pays for all the expenses related to the insured house’s rebuilding or repair, while coverage for home contents protects your personal belongings, household items and furniture in case they are destroyed or damaged by one of the disasters you’ve been insured against. Besides you can also get liability coverage, among others.

As a package policy, a householder’s insurance covers a combination of risks spread over 10 heads such as fire & allied perils, burglary & house breaking, all risk, plate glass, machinery breakdown, electronic equipment, pedal cycle, baggage, personal accident and public liability. While fire, lightning, explosion & implosion, riots, storm, cyclone and flood & inundation, among others, are covered under the head fire & allied perils, for instance, loss of or damage to jewellery and valuables caused by accident or misfortune while anywhere in India is covered under the all risk section.

Thus, if you want, you can also take individual policies like fire and allied perils and others to get limited cover. However, it is advisable to take a package policy rather than managing so many individual policies as it is very difficult to predict which natural disaster will strike you first. Also, in a package policy we have the option to choose the number of sections required (minimum four out of which fire and burglary are compulsory)

Another advantage of a package policy is that by mixing and matching the sections, you can get the best mix of covers you need. Also, by buying cover under more than six sections, you can even get a premium discount of up to 20%. However, it is advisable not to buy a cover which you don’t need. For instance, getting cover for loss of your personal baggage doesn’t make any sense if you are not a frequent traveller. Similarly, the pedal cycle cover is not needed by a majority of households today.

However, if apart from your house you also want to get your shop insured, then you will require a separate policy known as shopkeepers insurance policy, which is again a package policy. The risks that a shop is prone to are different from that of home. Hence, there is a need for a different policy. For example, in a shopkeepers package, stocks held or neon sign is covered, which is not there in a householder’s policy.

There are some common features also under householder’s and shopkeepers insurance policy. Like the fire section is compulsory to be included in both the policies. But there is difference in premium rates for fire and terrorism.

Importantly, it is relatively difficult to get a householder’s policy in rural areas as apart from the issue of availability of insurance, getting kutcha houses insured is not always possible. A householder’s policy covers your household contents only when they are kept in the building which is not made of a kutcha construction i.e., building(s) having walls and/or roofs of wooden planks/thatched leaves and/or grass/hay of any kind/bamboo/plastic cloth/asphalt cloth/canvas/tarpaulin and the like.

Although some insurers provide cover to kutcha houses with equal to or more than 100% loading, their number is very limited. Therefore, another variant of this policy, which is more suitable for villagers, is kissan package policy, which not only includes covers under householder’s policy but also covers risks against livestock, cattle and tractors, among others.

Likewise, crops can be covered under weather insurance, but weather insurance covers damages to crops caused only due to adverse climatic conditions and claims made due to any other reason are not entertained. For example, claims arising out of flood and drought are covered under weather insurance, but cover against pests and diseases can be taken under crops insurance only.

Thus, buying the right cover can, to a large extent, ensure your piece of mind. Still some precautions are needed. For instance, apart from doing the correct valuation of your property and valuables (which should be insured on a reinstatement basis because in the event of a loss, both would have to be replaced at today’s cost of construction or replacement), you also need not ignore the conditions or warranties mentioned in the policy. Simply because non-compliance of any of them may not hold the insurer liable of paying the claim and make the contract null and void!

SAFETY FIRST
  • FIRE INSURANCE Rs 25 per lakh
  • BURGLARY/ROBBERY Rs 50-100 per lakh
  • JEWELLERY/PRECIOUS STONES 1-1.25 % of sum insured PLATE GLASS 0.5-1% of sum insured
  • DOMESTIC APPLIANCES Varies depending on equipment PEDAL CYCLE Rs 10 per Rs 1,000
  • ELECTRONIC EQUIPMENT 0.75 % of sum insured
  • BAGGAGE Rs 1 per Rs 1,000
  • PERSONAL ACCIDENT Rs 150 per lakh
  • EARTHQUAKE Rs 8 per lakh
  • TERRORISM Rs 8 per lakh

Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...

10 year NSC launched, all set to give 8.7 per cent

Invest in Mutual Funds Online Download Mutual Fund Application Forms THE government introduced a 10-year National Savings Certificate ( NSC ), which will earn an interest rate of 8.7 per cent per annum. The notification for the launch of the new savings instrument, 10-year National Savings Certificate (IX-Issue), 2011, has been issued, an official statement said. The scheme will come into effect from December 1, it added. Investments in NSC will earn interest at the rate of 8.7 per cent compounded semi-annually, it said, adding that on an investment of Rs 100, the depositor will get Rs 234.35 on maturity of the NSC. There is no upper limit for investment in the certificate, it added. The new scheme will give better returns along with tax benefit to savers. At present, the maturity period of NSC is six years and it qualifies for tax relief for investment up to Rs 1,00,000 under Section 80C. The decision to raise the maturity period of NSC has been taken on the b...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now