Time for a change in mindset

Shirish Deshpande

We are not an insurance-oriented people, but riskier times and high property prices make a strong case for it

In a city like Mumbai, property or household insurance should be mandatory in view of the risks we face today. Right now it is not.

Like compensation under the Railway Act, insurance companies can provide a similar cover when property is damaged. The landlord or society should be liable for the initial token amount. After investigation when negligence is established, the entire claim amount can be taken from the accused.

Cooperative societies should become more alert and opt for  the coverage for household insurance. Now that the government’s policy, too, is in favour of redevelopment, societies and owners of old buildings can avail of it. The cost, too, is not high. The societies can also make money because buildings are getting extra FSI and TDR for redevelopment.

However, rules have to be followed. Structural changes need the approval of the BMC and the cooperative society. The BMC usually allows changes with certain restrictions. However, in most cases, residents undertake arbitrary changes without taking permission. There is no authority to supervise whether the rules are being followed. This will actually prevent the society from getting any insurance coverage.

When structural changes are made, technical experts like structural engineers and architects should be called in. But residents, in order to save money, simply employ masons and contractors, who drill holes anywhere and even remove supporting pillars and beams. This obviously reduces the value of your property.

The physical condition of any building is important. Sometimes even a 30-year-old building may be in better condition than a five-year-old one. The society and residents should be vigilant about maintenance. Water-proofing, terrace checks, fixing pipes and other urgent repairs should be carried out in time. Then the insurance company can give adequate coverage and, more importantly, there won’t be any objections raised when claims are made in case of damage.

Insurance companies sometimes take external factors into consideration in evaluating risks. For instance, after a tsunami, a building near the sea may attract a higher premium for insurance. Similar would be the case of a building in a riot-hit area. These days the probability of a terror attack may also be taken into account.

The security systems and fire protection also have a bearing on claims which may get discounted in the absence of such measures. Residents should take expert help to read the fine print because companies often do not give the consumer all the requirements to ensure claims.

But, as a nation we are not an insurance-oriented people. At the most, we go in for life, medical or motor insurance. People are not sensitive to the risks they face.

People are also not aware that the premiums for household insurance are very low. Residents need to realise that the value of their property, once covered by insurance, gets enhanced. In terms of returns on sale of flats too, insurance coverage is a good option.

Shirish Deshpande is a lawyer with the Consumer Court.

He spoke to Neeta Kolhatkar