It is the dream of every middle class Indian to own a home, even if it is just a one-bedroom dwelling. People are emotionally attached to the idea of having their very own “aashiana”. The easy availability of home loans has made it possible for many Indians to fulfill that dream and buy their own dwelling unit. However, despite very strong feelings for a house of their own, those very people somehow do not seem to be concerned about protecting that home, which is probably their most expensive asset.

Just think about it – you spend lakhs on your home, whether you construct it, or buy it, and another packet to do its interiors, and then you do not do anything to protect it! How illogical is that. It is a fact that while most Indians take steps to insure their life, their health, the health of their family, their parents, their vehicle, they do not seem to think their home needs insurance too. It has been established that home insurance is one of the most under-penetrated products in India, accounting for just 1 per cent of all the insurance products sold. Very few are aware of the benefits of home insurance, and even fewer opt for measures to mitigate the risk of damage to their homes.

According to a survey conducted by ICICI Lombard, 93% of their respondents did not have a home insurance policy. But awareness is gradually growing, in part due to recent catastrophic events such as floods in Chennai and Kashmir, landslides in Uttarakhand, earthquake in Nepal, and so forth. Even so, several industry experts feel the time has come for the government to step in and make home insurance compulsory in India.

Need for government to step in

We think a disaster is something that happens to others and never to us. We, in India, also have a feeling that it is only in rural areas that houses are collapsed during heavy rains or cyclones. We perceive our cement-fortified structures to be safe. However, the recent Chennai disaster shattered that myth and made it clear that a natural calamity can be equally damaging in urban areas. Even during the tsunami, the sheer volume of water that gushed through the roads, flooding homes and shops and basements, was an indicator that natural disasters do not observe the rural-urban divide. Other than natural calamities, accidents such as fire, willful damage caused by people, damage caused by violent mobs, riots, can also destroy your home, and your peace of mind.

Damage to one’s home can be emotionally devastating and can have a far-reaching financial impact on an individual’s life. No wonder several experts strongly believe that the government should make home insurance compulsory. A minimum basic sum insured can reduce the burden of people, in case an untoward incident happens that will impact their home. This is especially true so for those staying in calamity-prone areas. If the government makes it compulsory for all homeowners to insure their home, many people will find it easier to get back on their feet if their home is unexpectedly damaged or destroyed in some calamity or accident. The government can also provide income tax exemption on premium paid for home insurance. Apart from the building, the contents and other valuables in the house can also be protected through a home insurance cover.

The government is already on the right track, having passed the Real Estate (Regulation and Development) Bill in March this year. The passage of the Bill came as a huge relief to homebuyers, providing them protection from unscrupulous builders, and a forum for redressal of their grievances. Additionally, the interest rates have been steadily coming down, and home loans are cheaper than ever before. In keeping with these progressive measures, the government needs to complement them by making home insurance compulsory, a move that will provide financial relief to lakhs of people in times of disaster.

It has been observed that most people think of home insurance after a calamity destroys their home, but the logical thing to do is to protect it before a disaster takes place. And if people are not waking up to the necessity of insuring their dwelling, then, indeed, the government needs to step in, and make home insurance compulsory.