Home insurance under-purchased product in India
Even though there has been an increase in the number of home buyers in the country over the past few years, the number of buyers purchasing home insurance is fairly low. People tend to not purchase home insurance policy mostly due to the lack of awareness and myth surrounding it that it comes with high premiums and involves complex processes.
“Home insurance penetration in the country is extremely low, the main reason behind the poor demand for this type of insurance is due to lack of awareness about availability of any such product and apprehension that that it will be very costly and difficult to get any claim as documentation is too cumbersome,” says Saroj Satapathy, CEO, Ideal Insurance Brokers Pvt Ltd.
Considering the climatic changes and frequent occurrences of natural hazards (flood in Chennai, cyclone in Andhra Pradesh and cloudburst in Uttarakhand) across country, it has become all the more important right now to buy this product than ever before. “Purchasing a home insurance plan won’t prevent these natural calamities from happening. However, such plans can ease the financial stress while restoring the damaged property, says Satapathy.
A property worth Rs 50 lakh can be covered under home insurance (fire and allied perils) for as little as Rs 2000 for one year. One can buy long term policy which will still come cheaper.
The premium however will depend on sum insured, which will in turn depend on the construction cost and the built up area of the property. Construction cost will, in turn, depend on quality of construction and also locality to an extent.
Also, premium rates for earthquake rates do vary depending on which zone the property falls into.