When do you need property insurance?

Property insurance is essential only if you have meaningful property.

If you are living in a rented apartment or company-provided accommodation, you do not need property insurance for it.

If you own an apartment in India, remember these two points:

• First, you acquire the absolute right to the area situated within the four walls of your individual apartment.
• Second, you acquire an undivided right and interest in the land on which the apartment is built and also in its common areas and facilities. This is a joint right you hold with the other apartment owners.

Property insurance is relevant to both these aspects. You must insist that the association of apartment takers or the co-operative society running the apartment, insures the entire structure of the building and also important equipment such as transformers and electrical fittings, diesel generator, pump set, and if possible, even the lifts. In case of any structural or other damage to the building or its vital equipment, you are protected.

Is it expensive?

Such insurance is inexpensive. Let’s see the practical example of an apartment complex with 29 apartments.

Three years ago, the estimated value of the building and its essential equipment was Rs 3.25 crores.

• Taking out insurance for this sum, about three years ago, the premium worked out to be Rs 22,000 for the first year. Therefore, on an average, an apartment owner paid approximately Rs 759 as premium per annum. There was no claim of any sort.
• The insurance company drastically reduced the second and third year’s premiums to approximately Rs 18,000 and Rs 16,000 respectively. Thus, it worked out to just about Rs 552 per apartment owner per year.

If you have a reasonably well-furnished apartment with expensive gadgets like a washing machine, fridge, TV, music system, microwave oven, etc., a basic householder’s policy against fire, theft and breakdown should be useful.  Take this insurance only if you are living in the apartment, not if you are renting it out. A householder’s insurance is again rather inexpensive and a basic policy may not cost more than Rs 1,300 per annum.

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