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A message from Tendulkar

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A message from Tendulkar

Last updated: January 14 2012
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  • A message from Tendulkar

    What do you have to learn from the Master Blaster's decision to go in for R100-crore home insurance?

    W ho doesn't idolise Sachin Tendulkar? The Master Blaster is a role model for millions for his cricketing skills, his penchant for breaking records left, right and centre, and for his professional behaviour on and off the field.
    However, what made Tendulkar hit the headlines recently was not his cricketing score but an insurance policy. He opted for a whopping R100 crore cover for his home, that had his fans wondering if there was a need for one of India's richest sporting personalities to secure the safety of his asset.

    Tendulkar's decision was a sound one. Home insurance should be given priority by anyone invested in property.

    Take Suresh Sharma's example. This 30-year-old marketing executive, two years ago, spent R30 lakh in a new project on the Noida Expressway.
    “I took a loan of R24 lakh from the Bank of Baroda and got a free insurance cover for it. I feel secure in the knowledge that my wife and two kids will not have to grapple with the problem of repaying the remainder of the home loan amount if anything happens to me tomorrow.“
    What is important is also to know the difference between an insured home and an insured home loan and find out what suits you.

    Home loan insurance Banks and financial institutions which disburse home loans have tie-ups with specific life or general insurance companies to provide risk covers for borrowers' life and property.

    Says Karan Chopra, head retail business, HDFC, “Our Home Suraksha Plus covers borrowers against various misfortunes. In case of critical illness, accidental death and permanent total disability, we cover the loan amount.

    For loss of employment, we cover three EMI payments.
    This policy also provides fire and earthquake cover for loss or damage to a building and/or its contents. Homes and the contents of the building are also insured against theft, burglary and break-ins. The policy is of five years' duration with a onetime payment. The one-time premium for Home Suraksha Plus for a 30-year-old professional with a home loan of R30 lakh for 20 years will be R83018.

    Another private sector company, ICICI Lombard General Insurance, offers something similar in Secure Mind. Says Neelesh Garg, executive director, “Our policy not only secures the loan amount, it also provides a comprehensive cover for structure and contents against listed natural and man-made calamities. Not only that, people have the option to continue with the policy even after the loan term gets over.“

    “Our home loan insurance premium would be approximately between 2% to 3% of the loan amount for a fiveyear period and then it can be renewed,“ Garg adds.

    Some banks ­ the Bank of Baroda and the State Bank of India to name a few ­ provide free cover of the loan amount in case of accidental death or damage to the building due to natural and man-made calamities.

    Says Bhaskar Niyogi, chief general manager, Real Estate, Habitat and Housing Development, State Bank of India, “We have in the past offered free life cover (SBI Special Home Loan Scheme) and free health insurance cover (SBI Triple H+ Loan) to customers during festival periods. The bank is also offering a free accident cover to home loan borrowers.“

    Abhishek Sinha, who bought a house in a construction link plan in Shipra Sun City five years ago, says, “while some public sector banks are offering covers on accidental death or damage to the building free of cost, private sector banks have extended the cover to loss of employment and household items too. So the premium varies accordingly. A person needs to understand his/her requirement before getting an insurance cover. Also, one should do a comparative study and read the details of the risk cover very carefully.“ Sinha got an insurance cover from HDFC with the home loan.

    Awareness of the benefits of insurance is spreading, many experts feel. Suresh Agarwal, executive vice president, distribution and strategic initiatives, Kotak Mahindra Old Mutual Life Insurance, says,“Most credit institutions are now aware of this risk mitigation mechanism and have tied up with life insurance companies for offering this home loan cover.

    They make the borrower aware of this and enable the sale.“ Home insurance The term home insurance means a general cover for a building and its contents against possible damages resulting from unforeseen adverse future events like floods, earthquakes, fires, burglaries etc.
    Besides various private sector companies, the four government-owned general insurers are Oriental Insurance Company, United India Insurance, New India Assurance and National Insurance Company.

    “Under our policy, you can get every item in your house insured, no matter how small. Applicants have to produce an estimated cost of household contents under various heads such as electronics goods, kitchen contents etc. In case of burglary or accidental damage, we send our surveyor, who estimates the loss against the claim,“ says a senior officer from New India Assurance Company Limited.

    Talking about people's preference for insuring home contents, he says, “Normally people ask for an insurance cover for valuables like jewellery etc but these days they get bathroom equipment such as designer taps etc insured instead of the TVs and VCRs. Of late, we have witnessed huge claims for these items more than other household goods.“

    About the premium on home insurance, a senior officer from the National Insurance Company informs, “Premium varies from area to area and product to product. If you are residing in an apartment with the latest fire safety equipment and security measures the premium will be less than that of a colony reporting regular thefts and burglaries.“

    Unfortunately, awareness of home insurance is very low when compared to home loan insurance. Says Karan Chopra, “While awareness is definitely increasing, partly due to various calamities happening in different parts of the world, there still exists significant inertia towards purchasing home insurance from a consumer perspective.“




    -HT
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