Cookie-cutter houses are often decried for lack of aesthetics and character. Cookie-cutter home insurance, on the other hand, may just be a good thing.
Have you been all set for that long holiday and felt the pangs of fear about your home not being insured? In that last moment flurry to get a policy done, you will find that your jewellery has to be valued by an authorised valuer, you need the original invoices of your appliances to list their values and age, plus other mystifying and irritating requirements.
A home insurance policy is basically a fire and allied perils insurance policy. Apart from covering natural catastrophes, it packages a burglary cover for contents, appliances breakdown and even household staff medical and accident covers and public liability.
In the last decade or so, simplified home insurance policies have been introduced with self-declarations and good options. Now, a reference point is being created by the Insurance Regulatory and Development Authority of India (IRDAI), to make things even simpler.
From April 1, all general insurers have to mandatorily offer a standardised fire policy for homes — Bharat Griha Raksha — designed by the IRDAI. This replaces the Standard Fire and Special Perils Policy based on All India Fire Tariff, 2001, which is being de-notified for dwellings and micro-level and small-level enterprises.
De-tariffing fire cover
This will complete the detariffing of fire insurance that began in 2006-07 and 2007-08, at which time companies were given freedom to charge their own premium rates while policy clauses, terms, conditions and wordings remained.
There are actually three standardised policies that will be mandatory for insurers to offer. They are, Bharat Griha Raksha for home building and home contents, Bharat Sookshma Udyam Suraksha for enterprises with SI up to ₹5 crore and the Bharat Laghu Udyam Suraksha for enterprises with SI between ₹5-₹50 crore. The details are not yet out but promise policyholder-friendly features and simple language.
Bharat Griha Raksha offers coverage for fire, natural catastrophes (storm, cyclone, typhoon, tempest, hurricane, tornado, tsunami, flood, inundation, earthquake, subsidence, landslide, rockslide), forest, jungle and bush fires, impact damage of any kind, riot, strike, malicious damages, acts of terrorism, bursting and overflowing of water tanks, apparatus and pipes and leakage from automatic sprinkler installations, and theft, within seven days of the occurrence.
Apart from covering the building, there is a general home contents cover for 20% of the sum insured (SI) subject to a maximum of ₹10 lakh. This is automatic and does not need declaration of details. This soothes a pain point partially addressed by some simplified policies recently. You can also opt for a higher SI with declaration. Two new covers are available for valuable contents such as jewellery and curios and personal accident cover for the insured and spouse due to an insured peril.
Significantly, Bharat Griha Raksha gives complete waiver of under insurance. That is, if the SI you declare does not fully cover the property value — usually because of ignorance or poor advice — your claim will be settled up to the declared SI, and not proportionately as currently done. This is a common error that has trapped individual homeowners and is hence a nice bonus.
(The writer is a business journalist specialising in insurance & corporate history)