If I ask you how many of you have a Fire Insurance policy for your home? Chances are unless it was enforced upon you by the bank you got your loan from, 90% of you might say you don’t have one.
What’s on this page?
Let’s understand the fire insurance premium rates for your home with the following example:
What if I told you that insuring your home from fire costs you about 1 paise per ₹ 1000, yes you read that right, a paisa for 1000 Rupees. So the premium for a property worth around ₹50,00,000 would roughly work out to ₹. 5000 per year. The Fire policy covers you against thirteen perils, including Fire, Earthquake, Lightning, and Flood among others.
Could you find a cheaper deal?
Why do most Indian households still remain uninsured?
It could be a cultural thing. Maybe we believe the neighbor’s house will burn down but mine will remain intact.
It could be an awareness thing.
Finally, the lack of reportage on home fire accidents could be the cause of this inertia.
But even if you look at the insurance market for products with good returns, I for one, am yet to come across a product with a better return on investment.
Okay, so if you have indeed decided to get your home insured, here are a couple of pointers towards getting a sweeter deal
- While the Fire insurance covers the entire property, the chunk of your property cost is subsumed in the land. Perils do not affect land. Even if God forbid an earthquake strikes your residence, your construction would be shattered, but the land would remain intact. The insurer would also reimburse the cost of reconstructing the property.
You could therefore go for the cost of the reconstruction as your Sum Insured.
Say, the cost of construction in your area is around ₹. 5000 per square foot, and your plot size is around 1000 square feet, your Sum Insured for the annual policy should be around ₹. 50,00,000, irrespective of the market value of the property.
- Always opt for reinstatement of property. Reinstatement ensures that you are compensated at a rate that is equal to the cost of replacing or reinstating the damaged property.
- Getting a long term policy will enable the Insurer cut down rates even further.
Here’s to hoping you do buy Fire insurance for your home and never need to use it.
