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Insurance Article

Housing Society Insurance or Personal Home Insurance?

April 15 2015

Rahul's Tale

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Rahul was a banking professional who lived in a housing society with his spouse and two children. He knew that his housing society had bought home insurance cover and hence, he did not buy a personal home insurance. He though that since his house was a part of the society, it was duly covered.

However, on an uneventful day, cyclones along with floods ravaged his town. Floodwater entered his low-lying housing society damaging the structure and many of his personal possessions like furniture and kitchen appliances.

The society claimed for the damages and received the sum assured from the insurance company. However, the amount was far less than the cost of repairing the damaged structure. This meant that all society members, including Rahul, had to shell out a significant amount in the moment of crises. Also, contrary to his expectations, he did not receive any compensation for the damage caused to his personal possessions.

Rahul's story highlights the challenges faced by many people who rely on housing society insurance to cover damages to their home and property. Here are the common issues faced by them.

Issue#1: Insufficient Information and Myths

Some people have insufficient knowledge about home insurance. A few others, like Rahul, have myths regarding the coverage of home insurance. This leaves them vulnerable to financial shocks when the actual damage takes place.

Solution: Check websites of home insurance companies to learn about the details of different home insurance policies. Read the insurance policy document carefully.

Issue#2: Lack of Clarity on Coverage

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Like Rahul, many others are unaware that there are two types of home insurance policies - one for the structure and another for the contents.

Structure insurance covers the physical structure of the building, home, apartment, etc., while content insurance covers belongings like furniture, electronic items, jewelry, etc. Housing societies generally opt for structure insurance alone. This leaves the members exposed to the risk of damage to their contents.

Solution: Find out whether housing society insurance covers both content and structure. If it covers only the structure, you can avail content insurance to protect yourself from the risk.

Issue#3: Insufficient Coverage

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Rahul and his society members were compelled to pay money as the housing society insurance coverage was lesser than the cost of repairs. This insufficient coverage leaves you financially incapacitated in your moment of loss.

Solution: If you believe that the coverage provided by the society is not enough, you have two options.

- Take up the matter with the society and enhance the coverage
- Buy a personal home insurance policy as a top-up cover to enhance the coverage of structure and contents

This ensures that you will have to pay little extra money when the damage occurs so that you can concentrate on the important task of rebuilding your home.

Housing society insurance is definitely a good idea. However, the amount of coverage it offers may not be in the control of each individual member. Hence, supplementing it with appropriate home insurance cover is necessary to build a healthy home insurance portfolio. Click here to buy personal home insurance.

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