As the monsoon brings the risk of flooding, water damage and other property-related incidents, apartment owners may be left with significant out-of-pocket expenses despite their housing societies having insurance cover.
A common misconception among homeowners is that an insurance policy taken by the housing society automatically protects individual flats and everything inside them. In practice, society insurance is primarily designed to cover the building structure and common areas, while the interiors, household contents and personal liabilities of individual homeowners generally require separate protection.
“A society's policy is primarily meant to protect the building structure and common assets such as lifts, generators, clubhouses and common areas. It generally does not extend to what lies inside an individual's home,” said Rakesh Kumar, founder and managing director, Square Insurance.
This distinction can become particularly important during the monsoon, when flooding, water seepage, electrical faults and other incidents can damage not just the building but also expensive interiors and household belongings.
What does society insurance cover?
According to Priti Rohira, executive partner at ElpeeCo, the extent of a society's insurance cover depends on the policy terms and the society's “insurable interest” in the property.
Typically, a society policy covers the building and common infrastructure for which the society is responsible. This can include foundations, columns, beams, roofs, external walls, staircases, lobbies, corridors, lifts, basements, terraces, water tanks, pumps, fire-fighting systems and common electrical installations.
Common facilities such as clubhouses, gyms, community halls, parking structures, security cabins, boundary walls and landscaped areas may also be covered, depending on the policy. However, the cover generally stops where the individual homeowner's responsibility begins.
Interiors and belongings can remain uninsured
Modular kitchens, wardrobes, wooden flooring, false ceilings, decorative finishes, customised fixtures and air-conditioning systems installed by residents may not be covered under the society's policy.
The same applies to personal belongings such as furniture, televisions and other electronics, appliances, jewellery, artwork, clothing and other household contents.
“This means interiors, modular kitchens, wardrobes, flooring, furniture, appliances, electronics, jewellery and other personal belongings are often left completely unprotected unless the homeowner has taken a separate home insurance policy,” Kumar said.
The financial exposure can be substantial. Urban homes today often contain expensive interiors, appliances, smart devices and home-office equipment, meaning the value of contents and improvements can run into several lakhs of rupees.
Liability is another blind spot
Homeowners also need to consider liability arising from incidents originating inside their apartments.
For instance, a fire, water leakage or electrical fault originating in one flat could damage neighbouring apartments or cause injury to another person. In such cases, the individual homeowner could face compensation or legal claims.
Rohira said personal liability is therefore another important component that homeowners should consider while buying individual home insurance.
Homeowners should consider taking an individual home insurance policy that complements, rather than replaces, the society's cover.
A comprehensive home insurance with coverage for theft, natural disasters and liabilities cost around Rs 3500-Rs 5500 for Rs 10-20 lakh coverage.