Concept of insurance not widely popular, despite its benefits

Flood has receded but not the sufferings of people in Chennai and Cuddalore districts. Many have lost their life-time earnings. The list of damaged articles in every house is long. It would take a few years for many families to get back all those comforts of life which they had built brick by brick.

Though the flood could not have been prevented in all probability, the losses could have been minimised to a greater extent. “If people had insured their household articles for a small premium, they could have got compensated for most of their losses,” said S.R. Mothilal, Senior Divisional Manager, The New India Assurance, Madurai.

Unfortunately, the concept of insurance has not percolated among the masses, despite its benefits at the most distressful moments of life. Only three per cent of the population in the country had got general insurance policies. Vehicle insurance constituted the lion’s share, said M. Sadatcharapandi, Assistant Manager (Marketing), of the insurance company.

And Madurai is no exception to this trend. Only a small number of people have gone for insuring their household articles. “After the banks and financial institutions started insisting on insuring buildings while giving home loans, the concept of building insurance has picked up in the last one decade,” Mr. Sadatcharapandi said.

Why insure buildings

Any property is exposed to all kinds of danger caused by natural perils such fire, lightning, flood, landslide, storm and tempest and manmade perils such as explosion, strike and riot.

A building insured against fire could be protected under a total number of 14 kinds of perils, which include damage due to aircraft and test of missiles. The coverage for damage due to all these dangers could be done at a very nominal premium of around Rs. 35 for an insured sum of Rs. 1 lakh.

However, the policy holders are required to get add-on cover for earthquake. Premium for coverage against earthquake is still very cheap – Rs. 5 per Rs. 1 lakh of sum insured.

“With increased competition, companies are offering heavy discount – up to 50 per cent – on building insurance for high-value properties or long-term policies of 10 years,” Mr. Sadatcharapandi said.

What all can be insured?

House-holders policies cover buildings and their contents. And the contents include people’s life (death or impairment only due to accident), jewellery, documents like share certificates, domestic appliances, furniture and bicycle and other valuables.

Under the insurance policy, the insurer can seek compensation even for repairing electrical appliances such as television and refrigerators that develop snags due to electrical fluctuation.

A doctor in Sholavandan got Rs. 12,000 in the recent past when the picture tube of his television set conked due to power fluctuation, he added. Life of guests and visitors too are covered under public liability.

How is insurance done?

Insurance companies do not seek any vouchers or bills of various materials of the house at the time of taking insurance.

The declaration of the customer with a list of all items along with value of individual item is enough to get an insurance policy. However, at the time of claim of compensation, the market value of the loss is assessed by a surveyor or assessor to arrive at the loss, he said.

Many might think that Madurai is not flood-prone or not vulnerable to other natural calamities and hence might consider insurance as not required.

But, the general insurance policies would rescue the policyholders at times of fire accidents caused by electric short-circuit that might destroy the entire household articles.

“A loss occurring due to servant theft is also covered under this policy,” he added.

People of Madurai should go for house-holders insurance at least for the danger of house burglaries and chain snatching, said an industrialist R. Muthusankar.

Mr. Muthusankar, who has been insuring his house and its contents for the last six years, said that it was good for the common man to get such insurance to protect their life-time earnings.

Low premium

“And this protection from risks comes at a very low premium. The major benefit of such coverage is peace of mind,” Mr. Muthusankar said.

Not only burglary of valuables kept in the house is covered, but also theft of such valuables during travel by the policyholder at any part of the country is covered.

However, the value of jewellery lost/stolen during travel is restricted to 25 per cent of the total value of the jewellery.

Is it not better to insure things for a small premium than to regret later.