Background and Need
India as a natural disaster-prone country
India is known to be a natural disaster-prone country. In the words of UN Secretary General Antonio Guterres, India is the third worst-hit country by natural disasters since 1995 (The Economic Times, 2017 Sep 17). It was reported that 30% of India's geographical area is prone to severe earthquake, another 27% is prone to moderate earthquake and 12% is prone to floods. Besides, 76% of India's coastline is prone to cyclones and tsunami. India witnessed a number of massive and destructive natural disasters of various types such as Odisha Cyclone in 1999 causing the death of over 10000 people, Gujarat earthquake in 2001 (death toll: over 25000), Indian Ocean Tsunami in 2004 (death toll: over 11000), Mumbai Floods in 2005 (death toll: over 5000), Kosi Floods in Bihar in 2008 (death toll: over 500), Utharakhand Floods in 2013 (death toll: over 6000), J&K Floods in 2014 (death toll: over 400), Cyclone HudHud in Vishakhapattanam in 2014 (death toll: 124) and Chennai Floods in 2015 (death toll: over 500). The list does not include all the natural calamities in the country.
Kerala as a natural disaster-prone state
Kerala, the southern most state of India, is also not free from natural disasters. Its geographical area features coastline, sensitive high-land and wide mid land. The small state, which forms only 1.2% of India's total geographical area, accommodates 3% of India's total population. Kerala's 530 km coastline is been prone to cyclones and tsunami while the highland is prone to landslides and Kerala as a whole is prone to floods. According to the studies, the State is vulnerable to earthquake up to a magnitude of 6.5 on the Richter scale. Nearly 1,800 sq. km. area of the State is prone to landslips and more than 95 per cent of the land area is susceptible to cyclone (The Hindu, October 11, 2007). The natural disasters in the state have claimed as many as 547 lives in the last 5 years. The figure stand second among Southern states just after Tamil nadu. (The New Indian Express, July 21, 2018). The environmentalist Prof Gadgil accuses the illegal constructions in Kerala along Western Ghats for the severity of recent floods. By the way, Kerala floods in August 2018, which put the people in the state in misery, have caused for the partial or absolute loss or damage of houses. The prevalence of small and big natural disasters and presence of natural disaster prone areas in Kerala as well as India as a whole rise the relevance of home insurance. Home insurance would help the home owners and residents safeguard from the cost of possible loss or damage to the property as well as contents (valuables in houses other than documents).
Basics of Home Insurance
A home can be insured against all kinds of natural calamities such as earthquakes, lightening, floods, cyclones, landslides, tornadoes, fire, falling trees, explosion and so on.
What is home insurance?: Home insurance is a type of insurance which provide coverage for losses or damage caused to building or contents in it by an unfortunate event that may be natural or accidental. Home insurance is to protect the loss/damage of home or its contents or both. Home insurance, which is a part of general insurance, enables the insured to avoid the risk of loss or damage to home due to man-made or natural disasters. However, the insured home owner will get the amount as per the intensity of loss/damage to the house.
Who can buy home insurance?: Home owners who own a property which is not more than 30 years old can insure. At the same time, tenants living in a rented home can only insure the contents in the home under their ownership.
What is covered and not covered in home insurance?: Home insurance enables the insured to avoid the risk of loss or damage to building or/and contents in the home due to natural calamities, theft, accidents etc. Building and inside properties can be insured under the scheme. The contents include furniture and other valuables excluding cash, documents, certificates and debit/credit cards. The jewellery conditionally can be insured under home insurance policy. It can cover the loss of jewellery up to 25% of the total contents.
Who can or who cannot claim home insurance after the incident?: It depends on who is responsible for the loss or damage. If the theft is done by family member or relative, claim cannot be easily processed. The house owner or his/her nominees in his/her absence can claim the insurance after disaster or theft.
What to do if unforeseen loss/damage happened to your insured home?: The insured and insurer will do the following immediately after the loss/damage to the home:
What is the cost of home insurance?: The home insurance in India is relatively cheaper as the annual premium to cover the risk of loss/damage to the home is lower. A 1500 sq ft house can be covered for Rs 50 lac at around Rs 2000 a year. If the contents or properties in the home worth Rs 10 lac, Rs 400 should pay in excess annually as premium besides the basic premium to cover the risk of loss/damage. In fact, risk premium is the total price that a person is ready to pay to cover the risk. Theoretically it is equal to the probability of happening risky events multiplied by total value of the property. However, risk premium and discounts differ from insurer to insurer. Risk premium may change as per the cost of reconstruction keeps rising.
Conclusion
Home insurance helps cover the cost of partial or absolute loss/damage of the house and inside properties. It is under-utilised in India as less than one per cent of house owners have purchased home insurance policy in the country. This figure is surprising as natural disasters of various types and different intensities are quite common in the state of Kerala as well as India as a whole.
India as a natural disaster-prone country
India is known to be a natural disaster-prone country. In the words of UN Secretary General Antonio Guterres, India is the third worst-hit country by natural disasters since 1995 (The Economic Times, 2017 Sep 17). It was reported that 30% of India's geographical area is prone to severe earthquake, another 27% is prone to moderate earthquake and 12% is prone to floods. Besides, 76% of India's coastline is prone to cyclones and tsunami. India witnessed a number of massive and destructive natural disasters of various types such as Odisha Cyclone in 1999 causing the death of over 10000 people, Gujarat earthquake in 2001 (death toll: over 25000), Indian Ocean Tsunami in 2004 (death toll: over 11000), Mumbai Floods in 2005 (death toll: over 5000), Kosi Floods in Bihar in 2008 (death toll: over 500), Utharakhand Floods in 2013 (death toll: over 6000), J&K Floods in 2014 (death toll: over 400), Cyclone HudHud in Vishakhapattanam in 2014 (death toll: 124) and Chennai Floods in 2015 (death toll: over 500). The list does not include all the natural calamities in the country.
Kerala as a natural disaster-prone state
Kerala, the southern most state of India, is also not free from natural disasters. Its geographical area features coastline, sensitive high-land and wide mid land. The small state, which forms only 1.2% of India's total geographical area, accommodates 3% of India's total population. Kerala's 530 km coastline is been prone to cyclones and tsunami while the highland is prone to landslides and Kerala as a whole is prone to floods. According to the studies, the State is vulnerable to earthquake up to a magnitude of 6.5 on the Richter scale. Nearly 1,800 sq. km. area of the State is prone to landslips and more than 95 per cent of the land area is susceptible to cyclone (The Hindu, October 11, 2007). The natural disasters in the state have claimed as many as 547 lives in the last 5 years. The figure stand second among Southern states just after Tamil nadu. (The New Indian Express, July 21, 2018). The environmentalist Prof Gadgil accuses the illegal constructions in Kerala along Western Ghats for the severity of recent floods. By the way, Kerala floods in August 2018, which put the people in the state in misery, have caused for the partial or absolute loss or damage of houses. The prevalence of small and big natural disasters and presence of natural disaster prone areas in Kerala as well as India as a whole rise the relevance of home insurance. Home insurance would help the home owners and residents safeguard from the cost of possible loss or damage to the property as well as contents (valuables in houses other than documents).
Basics of Home Insurance
A home can be insured against all kinds of natural calamities such as earthquakes, lightening, floods, cyclones, landslides, tornadoes, fire, falling trees, explosion and so on.
What is home insurance?: Home insurance is a type of insurance which provide coverage for losses or damage caused to building or contents in it by an unfortunate event that may be natural or accidental. Home insurance is to protect the loss/damage of home or its contents or both. Home insurance, which is a part of general insurance, enables the insured to avoid the risk of loss or damage to home due to man-made or natural disasters. However, the insured home owner will get the amount as per the intensity of loss/damage to the house.
Who can buy home insurance?: Home owners who own a property which is not more than 30 years old can insure. At the same time, tenants living in a rented home can only insure the contents in the home under their ownership.
What is covered and not covered in home insurance?: Home insurance enables the insured to avoid the risk of loss or damage to building or/and contents in the home due to natural calamities, theft, accidents etc. Building and inside properties can be insured under the scheme. The contents include furniture and other valuables excluding cash, documents, certificates and debit/credit cards. The jewellery conditionally can be insured under home insurance policy. It can cover the loss of jewellery up to 25% of the total contents.
Who can or who cannot claim home insurance after the incident?: It depends on who is responsible for the loss or damage. If the theft is done by family member or relative, claim cannot be easily processed. The house owner or his/her nominees in his/her absence can claim the insurance after disaster or theft.
What to do if unforeseen loss/damage happened to your insured home?: The insured and insurer will do the following immediately after the loss/damage to the home:
- The insured house owner should contact the insurer
- The insured should provide relevant information (Policy and loss/damage details)
- The insurance company will process the claim request
- The insurance company will appoint a surveyor in two days
- The insured should submit relevant documents to the surveyor
- The surveyor will submit report to the insurance company in 7 days
- The insurance company will process the report and settle claim in 7 days
What is the cost of home insurance?: The home insurance in India is relatively cheaper as the annual premium to cover the risk of loss/damage to the home is lower. A 1500 sq ft house can be covered for Rs 50 lac at around Rs 2000 a year. If the contents or properties in the home worth Rs 10 lac, Rs 400 should pay in excess annually as premium besides the basic premium to cover the risk of loss/damage. In fact, risk premium is the total price that a person is ready to pay to cover the risk. Theoretically it is equal to the probability of happening risky events multiplied by total value of the property. However, risk premium and discounts differ from insurer to insurer. Risk premium may change as per the cost of reconstruction keeps rising.
Conclusion
Home insurance helps cover the cost of partial or absolute loss/damage of the house and inside properties. It is under-utilised in India as less than one per cent of house owners have purchased home insurance policy in the country. This figure is surprising as natural disasters of various types and different intensities are quite common in the state of Kerala as well as India as a whole.
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