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Los Angeles wildfires: Lessons from the disaster and why Indian homeowners should insure their properties

Jan 17, 2025 10:13 AM IST

From details of kitchen appliances, mobile IMEI and laptop serial numbers, all details should be shared with the home insurer to expedite the claims process

Even before the Los Angeles wildfires burned thousands of homes, property insurers had chosen not to renew thousands of home insurance policies in Pacific Palisades, Altadena, and other areas, media reports have said. This left several homeowners without adequate means to cover their losses.

Media reports have said that wildfires impacted California’s wealthiest neighbourhoods, including homes owned by Hollywood stars around Santa Monica and Malibu, affecting areas with a median home value over $2 million. (Photo for representational purposes only)(Agustin Paullier/AFP)
Media reports have said that wildfires impacted California’s wealthiest neighbourhoods, including homes owned by Hollywood stars around Santa Monica and Malibu, affecting areas with a median home value over $2 million. (Photo for representational purposes only)(Agustin Paullier/AFP)

Reports have said that the wildfires impacted California’s wealthiest neighbourhoods, including homes owned by Hollywood stars around Santa Monica and Malibu, affecting areas with a median home value over $2 million. According to AccuWeather Inc., the damage and economic losses are expected to total between $52 billion and $57 billion.

News agency AP reported that it has become extremely difficult for homeowners in high-risk areas to obtain or afford insurance. California homeowners in wildfire-prone areas either go without insurance or join the Fair Access to Insurance Requirements (FAIR) Plan, which the state created as a last resort for homeowners who couldn't find insurance.

So, what’s the situation like back home? While climate change may not result in a wildfire disaster in India, floods, earthquakes, cyclones, and tsunamis can cause massive property damage. Insurance experts point out that it is advisable to take a home insurance policy as buyers invest all their savings into buying an apartment or a house. Any damages incurred due to these factors may lead to homeowners spending vast amounts on repairs.

According to insurance experts, the percentage of people who avail themselves of home insurance products is perhaps less than .1%. This is evident from the fact that while property damage caused by floods or earthquakes is huge, the payout is negligible as most properties are uninsured.

What does a home insurance policy cover, and how much does it cost?

Experts note that a home insurance policy typically covers the house structure. If an individual decides to insure the contents within the house, it will include furniture, fixtures, portable devices such as phones and laptops, personal accidents, high-end bicycles, baggage, domestic appliances, and even jewellery in case the inventory is shared with the insurer.

Make sure you share details of your mobile IMEI and laptop serial numbers with the insurer

If a property owner plans to take a home insurance policy that takes into account the structure and inventory within the apartment, he should share a description of all the appliances with the insurer so that there are no disputes at the time of claim settlement. The inventory should include mobile IMEI numbers and laptop serial numbers, said Niharika Singh, ED Marketing, IFFCO Tokio General Insurance Company Limited.

Home insurance policy can also cover 12 months’ EMI

There’s also a loan protector, which is an extension of the home insurance policy and covers the EMI amount for up to 12 months if a homeowner cannot repay the loan due to job loss. She explains that to include coverage for job loss resulting from an accident, one needs to opt for the rider under the Personal Accident cover.

Housing societies can take a separate group policy to cover external damages

While housing societies can take a group policy that considers damages caused to multi-storey buildings by fire or earthquake, an individual can get his apartment covered. “The premium is calculated based on the apartment's market value. This can be home insurance for the basic structure or with contents within the house. The premium ranges from 25 to 50 per lakh for the structure based on the property's value,” she explains.

Singh said that if a property has been registered under joint names, it is possible to take out joint insurance for the apartment.

Tenants can take a home insurance policy if their landlord has not taken one

Tenants can also take out a home insurance policy if the landlord has not. Most people require a security deposit from the tenant to cover any damages caused to the apartment. If damage is caused to the apartment, such as an air conditioning blast or a fire, expenses for the repair can be met through the home insurance policy. “The premium for this policy is also decided based on the property's market value,” said Singh.

6 things to keep in mind before you decide to go in for a home insurance policy

  1. If one is taking a policy on the structure, it should be based on the market value and not on the loan the person would have availed of.

2. A person owning three residential properties decides the premium based on their market value. While the annexures attached to the policy and the contents within the premises will differ, the premium will be arrived at based on the market values of each of the three properties. These could all be pucca residential structures such as apartments and bungalows.

3. Parking space within the premises of a bungalow can be considered part of the home insurance policy. Still, a general parking space in a housing complex is part of the common area and is usually covered under the group housing insurance policy.

4. Homebuyers should know how to file a claim, they should be aware of the type of documentation required, and the typical time taken for claim settlement. They should also be aware of any limitations or exclusions to the coverage and any applicable deductibles.

5. Homeowners should ensure the correctness of particulars. For instance, property description, content description, location address, etc., should be complete. Experts say that any mismatch in these areas can cause problems in the event of claims.

6. Experts also point out that homeowners should maintain a record of their personal property. This includes ownership deeds, with visuals of the exteriors and interiors of the property, and receipts for expensive items such as electronics and jewellery. These records can be helpful in the event of loss or damage, as they can provide proof of ownership and help expedite the claims process.

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