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

Retirement planning from a long-term perspective

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds     `HOW green was my valley'. This title comes from a movie I had watched many years ago. A little boy's journey into adulthood and the story of a Welsh valley's turn of-the-century descent from pristine paradise to despoiled coal mining.   I thought of the title because it is comparatively reflective of a person's life ­ the glorious years when he is earning and the sun down years when he is not having his regular job and, hence, his living standards comes down. The reason is a combination of things. Inflation of food items, transport, increase in health related costs in the later years of life and increase in expenses in almost all basic amenities of life. In India, the social security system is almost non-existent. In some states, wherever it is available, the scales of benefits are extremely modest...

LIC's JEEVAN SHIKHAR

  LIC's Jeevan Shikhar is a participating, non-linked, saving cum protection single premium plan wherein the risk cover is ten times of Tabular Single Premium. The proposer will have an option to choose the Maturity Sum Assured. The premium payable shall depend on the chosen amount of Maturity Sum Assured and age at entry of the life assured. This plan also takes care of liquidity need through its loan facility. The plan will be open for sale for a maximum period of 120 days from the date of launch. 1.   BENEFITS   : a) Death Benefit: On death during first five policy years: Before the date of commencement of risk   :   Refund of Single Premium without interest. Single Premium mentioned above shall not include any extra amount if charged under the policy due to underwriting decision and taxes. After the date of commencement of risk   : "Sum Assured on Death" equal to 10 times the tabular single premium shall be payable. On death after completion of five policy years but b...

Investment Strategy - What is Sector Rotation Theory?

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)   The economy goes through cycles : it expands for a few years and then contracts. Study of historical data suggests that different sectors tend to perform well on the stock markets during different stages of the economic cycle. While history never repeats itself exactly, some broad patterns tend to recur. Investors can take advantage of the sector rotation theory to move their money from those sectors that have seen their best times to those that are likely to do well in future.   The person who developed the sector rotation theory is Sam Stovall, chief investment strategist at Standard & Poor's. He developed this theory by studying data on economic cycles going as far back as 1854 provided by the National Bureau of Economic Research ( NBER ) of the US.   When trying to correlate stock-market perfor...

Rajiv Gandhi Equity Savings Scheme (RGESS) set for launch this week

The finance ministry is set to notify the Rajiv Gandhi Equity Savings Scheme ( RGESS ) this week.   Though Finance Minister PChidambaram had approved on September 21, the scheme announced in this year's Budget, and had said that the revenue department will notify the scheme and the Securities and Exchange Board of India ( Sebi ) would issue relevant circulars within two weeks, it is yet to become operational.   A senior finance ministry official said the revenue department was expected to notify the scheme any day now to attract retail investors to the equity segment.   He added that Sebi was not required to issue any circular for the operationalisation of the scheme and that after the issuance of the revenue department's notification, investors would be able to avail of the benefits of the scheme.   The official accepted that implementation of the scheme had been delayed due to the deliberations on inclusion of mutual funds ( MF ) in it.   ...

CNX Midcap vs BNP Paribas Midcap Fund

BNP Paribas Midcap Fund - Invest Online   Te  performance of BNP Paribas Midcap Fund  – which has across the last 3 years generated superior returns over the benchmark – especially when the markets have gone down the fund has handsomely outperformed the benchmark preserving the capital of the investors. The fund has been able to do this only due to the superior stock selection process ( BMV approach) that is diligently followed at BNPP.   Highlights of BNP Paribas Mid Cap Fund:   Investment Objective : BNP Paribas Mid Cap Fund gives an investor exposure to invest in the various quality midcap stocks. The fund also has some exposure to large as well as small cap stocks.   Investment Approach : BMV ( Quality and scalability of Business →Good Management → Reasonable Valuation ) with Bottom-up stock picking.   Most of the investors are way happier if the fund that they have invested in is a significant Outperformer in tough times than in Good ti...
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