Standard House Insurance Policy: Bharat Griha Raksha
A lot of people chose not to purchase a home insurance coverage due to high costs. To address this, the Insurance Regulatory & Development Authority of India (IRDAI) published rules for the issuance of the Bharat Griha Raksha (BGR) standard house insurance policy in January 2021. BGR is intended to provide cheap coverage for residential properties.
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All general insurance companies were required by the insurance regulation to provide this basic insurance policy. And as a result, the majority of insurers began providing this insurance coverage on April 1, 2021.
Here are some details about the Bharat Griha Raksha insurance policy so you can decide if you want to purchase it.
What is covered by the policy’s coverage?
Additional expenses: In addition to the actual damages, the policy also covers a number of additional expenses that frequently arise in the event of serious damage. It covers the reasonable costs of clearing the location of debris up to 2% of the claim amount.
“The coverage covers the reasonable costs of the architects, surveyor, and consulting engineer up to 5% of the claim amount. When the home structure is unfit for habitation owing to physical loss, the policy additionally pays for Loss of Rent and Rent for Alternate Accommodation “IFFCO Tokio General Insurance Executive Vice President (Product Development).
Actual damage: Per IRDAI guidelines, the Bharat Griha Raksha covers common losses due to fire, explosion and implosion, lightning, volcanic eruption, earthquake or other natural calamities, storm, cyclone, typhoon, hurricane, tempest, tornado, tsunami, flood and inundation, landslide, bush fire, forest fire, rockslide or jungle fire.
The insurance policy also covers losses brought on by impacts or collisions with any exterior physical objects. Such as moving cars, fallen trees, flying items, or even walls.
In addition to these, the insurance covers any physical loss, damage, or destruction brought on by theft to the covered property within 7 days of any insured event’s occurrence and as a direct result.
A disaster which is Man-made: This policy also provides coverage for some man-made catastrophes, such as riots, strikes, malicious damage, terrorist attacks, and missile test launches. “Prior to this, the SFSP Policy, which provided the option of terrorism insurance, included home protection. Terrorism has been incorporated into the BGR solution, which was just released and is primarily focused on home protection “Roy explains.
Default coverage for interior furnishings unless excluded
The majority of the time, any damage to the residence also causes damage to any contents kept there. Automatic covering for the contents is provided by BGR. If the home building is covered, the sum insured for general home items is automatically calculated as 20% of the home building’s sum insured, which is capped at Rs. 10 lakh. A policyholder has the opportunity to decline this feature as a recorded choice if he/she does not want it.
Alternative cover
In addition to the basic cover and built-in covers, Bharat Griha Raksha offers two additional covers, namely: (1) Cover for Valuable Contents at Agreed Value Basis (under Home Contents cover) & (2) Personal Accident Cover for Insured & Spouse if Insured Peril Causes Damages to the Home Building and/or Home Contents also And Results in the Death of Either or Both Of Them.
You can provide information and choose a higher home content coverage if the worth of such items in your home is large. “You can choose add-on protection for this if you want to insure precious things like jewellery and ornaments,”
There is no need to provide a value certificate, nevertheless, if the chosen sum covered is less than Rs. 5 lakh. The additional premium for such add-ons is not permitted to be greater than 50% of the BGR basic premium.
Let’s examine the characteristics of the policy in light of the IRDAI recommendations.
Key attributes
Higher insurance coverage limits
The coverage provided by this policy considers the cost that will be incurred to reinstate or replace the insured objects rather than their market value.
“A method for calculating the sum insured is provided by the Bharat Griha Raksha policy. According to the policy’s details, the carpet area of the residential structure, including the policyholder’s home’s fittings and fixtures. Multiplied by the construction cost per square metre at the policy’s start date is used to determine the amount insured”
Inexpensive premium
Numerous insurers are providing the coverage under BGR at competitive prices. For instance, Digit offers Rs 1 crore of insured sums for Rs 2,466 per year in premiums, which works out to Rs 247 per year for each Rs 1 lakh of covered sum. You spend Rs 24,660 over ten years to cover a Rs 1 crore in protection.
Benefit of not having underinsurance
This product, a unique aspect of this policy, is exempt from underinsurance. This particular aspect of the policy is special. It basically means that the amount payable will not be impacted if the sum insure, which is determine using the data you have given to the insurer, is less than the actual value at risk.
Let’s take an example where your home building is 100 square metres and the city’s construction cost is Rs 15,000 per square metre. You accidentally reported 90 square metres, thus your home construction is only covered for Rs. 13.5 lakh as opposed to Rs. 15 lakh in insurance. The insurance provider will reimburse you Rs 5 lakh if a loss necessitates repairs that cost you Rs 5 lakh.
Annual increase in the long-term policy’s benefit sum insured
Because building replacement costs increase over time owing to inflation. Building a house now would cost many times more in ten years than it does today. The BGR policy has an auto escalation option that raises the sum insured amount yearly to address this issue.
For a yearly policy, daily escalation
Price increases are a phenomenon that occurs gradually rather than just yearly. The BGR offers daily escalation of insurance cover in order to provide the benefit of increased cost with time during one policy year. In the case of an appropriate policy, the insurance is automatically raised. By an amount equal to 1/365th of 10% of the sum insured as of the policy commencement each day.
What is left out?
Although the majority of common damages are cover by the policy, some damages are not. Loss, destruction, or damage to any electrical or electronic machine, equipment, fixture, or fitting due to over-running, high pressure, faulty wiring, arcing, self-heating, or electricity leakage. From any source are among the damages with in exclusions list (lightning included). This exclusion solely applies to the specific machine that was thusly lost, damage, or destroyed.
Should you make a purchase?
The coverage is made simpler in a basic house insurance programme, making it easier for a policyholder to comprehend. Additionally, standardization forces insurers to provide relatively low premiums. It is simpler to compare premiums and choose insurance because the majority of features are the same across insurers. Financial protection for precious assets is necessary for prudent financial planning, and this policy provides a decent option to do it at a reasonable cost.
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