In the meantime many of the investors are likely to slow down their investment rate particularly in Equity and divert their investible surplus to Debentures, Bonds or to Gold and real estate. Investors may also decide to divert some funds to the purchase of consumer durables, which they had been postponing for some time. If so, it is time to spare a thought on how to protect our investments in these physical assets from the risks such as theft, burglary etc.

When we normally look at an investment in Gold or jewelry we fail to recognize that there is a risk of loss associated with it due to theft or robbery. Similarly, whenever we buy expensive Electronic Items such as a Home Computer, AC or a TV we often fail to think beyond the guarantee. In all such investments, we need to develop a sense of "Hedging of Risk" so that investments once made will be protected. This is a probability game and the objective is more to prevent an unforeseen loss than making a profit on the deal. Not all may appreciate the need to protect investments in physical assets, but for those who believe in this principle, the "House Holder’s Insurance Policy" (HHIP) from New India Assurance could be worth considering.

This policy provides coverage on Residential property, Contents, Jewelry, Domestic Appliances, Baggage during travel, as well as Personal accident and Third party liability. The risks that can be covered include Theft, Burglary, Robbery, damages due to Fire, Gas burst, Water tank overflow, Storm, Inundation, Riot, Strike, accidental Mechanical and Electrical reasons. Even damages to the building and third parties due to the collapse of an antenna are also covered. Excepting the normal wear and tear and what can be termed as willful neglect, the coverage of risks is fairly comprehensive.

The premium on Householders policy is determined on the basis of the composition of the assets and may average out to about 0.75 % of the value insured if jewelry is covered. It is necessary for the insurer to check with the insurance company the total premium payable and whether there are any sub limits for compensation on any type of asset such as jewelry. If the general policy restricts coverage on any item, additional premium has to be paid to cover your risk adequately. "Under-Insurance" even by mistake needs to be avoided since this will restrict the claim settlement. For example, If you have jewelry worth Rs 2 lakhs, it is not proper to insure it only for 1 lakh because you presume that you may not lose all the jewelry in one incident. Similarly if you acquire an expensive appliance while the policy is in force it is better to intimate the acquisition to the insurance company and pay the required premium rather than suppress the fact. In case of under insurance, the claims will be settled only for the proportionate amount of the damage as if the uninsured portion has been co insured by the policyholder himself.

As in the case of Health Insurance, a special offer is available for Credit Card Holders of Diners club and Citi Bank regarding this policy. They have a free coverage under the HouseHold Insurance cover upto one lakh (Excludes Jewelry and Cash) on a "First Loss Cover " basis. This First Loss cover basis is an exception to the general rule of "Proportionate Settlement of claim" mentioned above in case of Under Insurance. Such cardholders can take a supplementary policy based on their overall requirements.

Conservative investors who have an urge to protect their present belongings would love to explore this policy which is becoming more and more relevant in the crime filled society in which we live today.

Na.Vijayashankar
24/04/99