Explained: Does your regular home insurance cover flood damage?

The insurance regulator mandated all general insurance companies to offer Bharat Griha Raksha(BGR), a standard insurance policy which provides cover against fire, floods, explosions, storm, cyclone

The economic loss of 2023's floods across India, especially in states like Uttarakhand and Himachal Pradesh is estimated to be in the range of Rs 10,000-15,000 crore, as per SBI’s research report, Ecowrap. India has faced the third-highest number of natural disasters since 1990, next only to the US and China and 41 per cent of natural disasters occured in the form of floods and storms. However, despite ew records of economic stress, there is a crucial protection gap in India- the losses that are insured. 

In India, this protection gap figure stands at 92 per cent. “In effect, In India, an average Indian is insured of roughly 8% of what may be required to protect a family from financial shock following the death of the breadwinner. This means having savings and insurance of just Rs 8 for every Rs 100 needed for protection, leaving a protection gap of Rs 92,” it said. 

 

Homeowners should ensure their home insurance includes protection against flood damage, while businesses should have comprehensive property insurance.

Don't opt out of coverage against natural disasters

" A home insurance policy provides coverage for damage to the policyholder's home or contents caused by theft, fire, storm, floods, or tsunami. If you live in flood-prone or landslide-prone areas, this policy will cover physical loss or damage caused by subsidence of the land. If you opt out of coverage against natural disasters, your insurance policy will no longer be helpful. Additionally, flood insurance claims can only be made after a waiting period of 15 days from the policy inception date. Furthermore, theft within seven days from the occurrence of and proximately caused by any of the above-insured events is only covered in this policy," explained Tarun Mathur, CBO - General Insurance, Policybazaar.com.

Home Insurance ensures protection against natural calamities such as Earthquake, Storm, Flood, Cyclone up to 100% of the Sum Insured mentioned in the policy, according to Gaurav Arora - Chief - Underwriting & Claims Property & Casualty, ICICI Lombard.

 

Get the Bharat Griha Raksha policy
The insurance covers your home and home contents, that is, articles or things in your home. Under this policy, the insurance company pays you for the losses, including damage or destruction of the building of your home and articles or things in it. The policy covers earthquakes, volcanic eruptions, or other convulsions of nature.

Under this policy, Insurer agrees to pay You for the loss You suffer when unexpected events cause physical loss, damage or destruction of the building of Your home, and articles or things in it.

This policy has been made mandatory by Irdai for every insrer to offer with effect from April 2021. 

What all is covered

Policy will cover physical loss or damage, or destruction caused to the Insured Property by fire, explosion or implosion, lighting, earthquake, volcanic eruption, or other like convulsions of nature, storm, Cyclone, Typhoon, Tempest,

Hurricane, Tornado, Tsunami, Flood and Inundation, landslides, bush fire, jungle fire and forest fires. It also covers impact damage of any kind, i.e., damage caused by impact of, or collision caused by any external physical object (e.g. vehicle, falling trees, aircraft, wall etc. Even Missile testing operations and damage caused due to riot, Strikes, Malicious Damages are included.

The cover protects your hose from act of terror, bursting or overflowing of water tanks, apparatus and pipes, leakage  from automatic sprinkler installations and provides cover for loss caused by theft within 7 days of and caused by

occurrence of these events.

You can choose between three covers

The Home Building Cover is for the building of Your home. It may be constructed using any material. Additional structures such as garage, verandah, domestic outhouses for residence, compound walls, retaining walls, parking space, solar panels, water tanks or residence, permanent fixtures and fittings and internal roads are also covered. 

The Home Contents Cover is for General contents of household use in Your home. 

If you opt for the home building cover, the general contents of your home will be automatically covered for 20 per cent of the sum insured up to a maximum of Rs 10 lakh unless you opt for a higher sum insured and declare details.

Optional covers: You can pay an additional premium for two optional covers.Contents like television, refrigerator, furniture and other household articles are covered. You can also cover valuable contents like jewellery, works of art, silverware, paintings, etc by paying additional premium.

The other option is the personal accident cover where if any damage to your home results in the death of either you or your spouse a compensation of Rs 5 lakh per person would be payable.

Apart from this, add on coverage like loss of rent or rent for alternative accommodation, architect, surveyor and consultant engineer fee up to 5% of the claim amount and costs of clearing debris are also provided under this policy.

Other features 

"Bharat Griha Raksha policy does not provide a complete waiver of under-insurance. The policyholder's claim will not be settled proportionately but up to the sum insured that is declared. For example, if the general home contents (such as television,, fridge washing machine) are insured for Rs 50,000, while the actual value is Rs 1 lakh, the policy will still pay the entire sum insured, i.e. Rs 50,000," said HDFC Ergo.

What Does Bharat Griha Raksha Policy Not Cover?

• Loss or damage to unset precious stones, manuscripts, plans and drawings

• Loss, damage or destruction to any electrical/electronic machine, apparatus, fixture, or fitting by over-running, excessive pressure and short-circuiting

• War, invasion, an act of foreign enemy hostilities or war-like operations

• Any willful negligence or misconduct

Factors to consider before opting for a home insurance policy: 

A home insurance premium depends on various factors such as sum assured, coverage and other factors including age of the property, location, construction quality and safety features equipped in a house.

"Home owners can also opt for add-on features to take advantage of additional protection and to insure products available in the home. While opting for a home insurance policy and add-on features, one should consider cost of construction, the contents , furniture fixture and appliances at home and their repair and replacement costs, to select the appropriate option," said Vivek Gambhir, Executive Vice President & Product Head- Accident & Health, Tata AIG General Insurance.

How do I make a claim?

If You suffer a loss that is covered by this policy, You must make a claim. Insurer will verify the claim and accept it if it is according to the terms and conditions of this policy. When You suffer loss, You must  give notice to insurer immediately, You must state in this notice

i. the Policy Number,

ii. Your name,

iii. details of report to the police that You made,

iv. details of report to any Authority that You made,

v. details of the Insured Event,

vi. a brief statement of the loss,

vii. particulars of any other insurance of Your Home Building or any of

Your Home Contents,

viii. details of loss or damage under any Optional Cover or Add-ons,

ix. submit photographs of loss or physical damage, wherever possible.

 report to police, fire authorities and appropriate legal Authorities, and take all reasonable steps to prevent further damage to Home Building and Home Contents

Preserve and collect evidence, take and preserve photographs, assist insurer and its representatives in collecting evidence and details, give all information, books of accounts, and other documents to insurer. Submit claim form at the earliest opportunity but within 30 days from the date you first notice the loss or damage