Mumbai: Most people in the country prefer not to spend on a home insurance policy despite awareness on the need for the cover, a Bajaj Allianz General Insurance survey said.
Around 1200 people from metros like New Delhi, Mumbai, Kolkata, Chennai , Bengaluru, Hyderabad, Ahmedabad, Pune and non-metros like Jaipur, Surat, Nagpur, Jalandhar, Chandigarh, and other towns, took the survey last month.
As total of 60 percent of these respondents were home owners, rest 40 percent lived on rented space. Around 75 percent were aware that home insurance was essential. However, only 30 percent of them had insurance for either their home or its contents, said the survey report.
The deluge in Jammu and Kashmir last year and the recent Nepal earthquake are reminders that natural calamities come without any warning.
Around 64 percent of homeowners felt earthquakes and other natural calamities were the biggest risks their homes were exposed to, followed by fire (28 percent) and thefts, burglaries (8 percent).
Among those who lived on rent, 56 percent believed natural calamities were the biggest threat to their homes.
Around 30 percent of them said fire was a major risk while 14 percent termed thefts and burglaries as risks.
Home insurance penetration in the country is at a dismal 0.07 percent. The demand for this cover was low because the general public found home insurance products and clauses complicated and difficult to understand, revealed the survey.
It showed that most of the respondents were aware of home insurance as a risk management tool. However, they were not well informed about the coverage that different home insurance policies offered.
"Contrary to the general belief, a home insurance policy is a very affordable financial tool and covers a wide array of risks a home and its contents are exposed to, such as fire, theft or burglary, all natural calamities and electrical and mechanical breakdown," Bajaj Allianz General Insurance chief technical officer, non-motor insurance, Sasikumar Adidamu said.
Further, most homeowners utilised their savings to purchase a house , with 37 percent of them preferring the finance option over home loans (31 percent).
Around 32 percent utilised a mix of both options to purchase a home. While 66 percent purchased homes for residential purposes, for 34 percent home owners, it was an investment tool, the report said.
The survey further revealed that 46 percent of respondents thought the best time to buy a home was when there was a drop in property prices and 41 percent believed a drop in interest prices was the right time.
Only 13 percent felt that festive season was a good time to purchase a home. Around 60 percent of home owners purchased their home insurance policies from banking and financial institutions as these institutions have offered them loans.
The remaining 40 percent purchased policies from agents and other sources, the report said.
