Author: Rupanjali Mitra Basu

A home insurance policy is said to be important to protect against the financial loss suffered if the house is damaged due to any natural or man-made calamities. That is why homeowners invest in home insurance plans so that they can face financial loss if their property is damaged. But, what about tenants? Do they need any insurance cover?

Yes, they do. Though tenants live in rented properties, they still need insurance for the contents of the home. If they own the household contents, they would face a financial loss if the contents are lost, stolen or damaged. Alternatively, if the household contents also belong to the landlord, the tenant has the financial responsibility to ensure that the contents are not damaged due to use. If the contents are damaged or stolen, they might have to compensate the landlord for the damage or theft. That is why a renter’s insurance policy comes in handy. Let’s understand what the policy is and why it proves useful.

What is renter’s insurance?

A renter’s insurance policy is a policy which covers the loss or damage of the contents of the house in which a tenant lives. These policies are home insurance plans which cover only the contents of the home. They are called renter’s insurance because tenants usually buy a home insurance policy covering their household contents.

What is covered under renter’s insurance?

Coverage under a renter’s insurance policy can be subdivided into the following categories –

1. Coverage for the contents of the home

   A renter’s insurance policy covers the contents of the home against the following risks –

   • Fire
   • Theft
   • Natural calamities
   • Man-made calamities
   • Electrical breakdowns
   • Accidental damages

2. Coverage for financial liability

   Besides covering the contents of the home, renter’s insurance policy also covers the legal liability that the tenant faces if any individual is hurt in the tenant’s home. For instance, if another individual (who is not the tenant, his/her family or the landlord) suffers any injury when at the home of the tenant, the tenant might face the financial responsibility to pay the injured individual’s medical expenses. This legal liability is also covered under a renter’s insurance policy.

3. Coverage for special assets

   Under this cover, special assets of the tenant are covered. These assets can be high-value assets like jewellery, expensive gadgets, works of art, curios, etc. These assets are covered against damage due to natural or man-made calamities and theft.

Add-ons under renter’s insurance

A renter’s insurance policy, besides providing the above-mentioned coverage, also has different types of add-ons which help in increasing the coverage of the plan. Some common extensions include the following –

1. Rent for an alternate accommodation

   If you are unable to live in the rented house due to damages which are being repaired, the policy pays you the cost incurred on seeking alternate accommodation

2. Coverage for portable electronics

   Portable electronics like laptops, portable gadgets, etc. get covered under this add-on.

3. Jewellery and valuables cover

   Under this add-on, you can get coverage for your precious jewellery and other valuable items.

4. Terrorism cover

   If the contents of the home are damaged due to any terrorist activity, the damages are covered under this add-on.

5. Pedal cycle

   This add-on extends coverage to a pedal cycle that you own. If the cycle is damaged due to fire, accident, natural or man-made calamity, the add-on pays for the loss suffered.

What is not covered under renter’s insurance?

A renter’s insurance policy does not cover damages suffered due to the following instances –

1. Wilful damage caused deliberately
2. War, rebellion, mutiny and related perils
3. Precious items are not covered unless otherwise specified
4. Very old content which has lived its useful life is not covered
5. Any type of consequential losses are not covered

Why is renter’s insurance required?

A renter’s insurance policy proves to be a useful cover for tenants because of the following reasons –

1. The policy covers the financial loss which tenants face if their belongings are damaged due to any calamity
2. If the house suffers any damage, the landlord would pay for the repairs of such damages but if the tenants lose their belongings, the financial loss is theirs alone. This loss is covered by renter’s insurance policy which gives tenants financial relief
3. Since the renter’s insurance policy also covers third-party liability, it gives tenants a sense of financial security that if any individual is hurt in their rented apartment they would not have to bear any losses
4. If you accidentally damage the landlord’s assets in the house, the policy would give you compensation for such damages too
5. The add-ons available under the policy increase the scope of coverage and give additional financial protection
6. The premiums are very low and you can easily buy renter’s insurance policy for your household contents

How much does renter’s insurance cost?

The premiums of a renter’s insurance policy depends on various factors. These are as follows –

• The value of the contents to be insured affects the premium. If the value is high, the premiums would be high
• The risks faced by the property based on its location, age, safety and security measures etc. have a direct impact on the premium. If the risk is perceived to be high, the premiums would be high
• if add-ons are selected with the basic policy, the premiums would increase

Top #6 Things to remember when buying renter’s insurance

Before buying a renter’s insurance policy, the following things should be kept in mind –

1. Ensure that all the contents are covered under the policy. If any content is left uninsured, you would have to bear the costs if such content is damaged or stolen
2. The sum insured of the policy should be sufficient to cover the replacement cost of the contents which are damaged or stolen
3. Choose the required add-ons if they suit your coverage requirements
4. Always compare the available renter’s insurance policies before buying one. Comparing allows you to buy the plan which has the most inclusive coverage features at the most reasonable premium rates
5. Keep the bills and other relevant documents of the content that are insured under the policy
6. If you have precious jewellery and other valuable items in your possession, get them insured under the available add-ons as their loss would be the most expensive to bear

If you are a tenant and are living in a rented house you don’t have any responsibility in case the structure of the house faces any damage. However, if the contents are damaged or burgled, you tend to incur a financial loss as the contents belong to you. Therefore, insuring the contents of the home is a wise move and since the premiums are not very high you can easily buy renter’s insurance policy. So, invest in a comprehensive renter’s insurance plan and secure your household contents against possible damages.

Frequently Asked Questions:

1. What is the difference between renter’s insurance and homeowners insurance?

   A homeowner’s insurance policy is a policy which is bought by individuals who own their homes. These policies are usually bought to cover the structure as well as the contents of the home. a renter’s insurance policy, on the other hand, is bought by tenants and the policy covers only the contents of the home.

2. Who can buy renter’s insurance policy?

   A renter’s insurance policy can be bought by tenants who are living in rented accommodation.

3. Can the coverage be increased if required?

   Yes, you can increase the coverage level under your renter’s insurance policy when the policy is up for renewal.

Fixed deposits are always viewed as secured investment avenues wherein the returns are guaranteed. Many risk-averse investors prefer to invest their hard-earned money in fixed deposit schemes of their banks expecting a guaranteed corpus after the selected duration. But what if your deposits were used to bail out an ailing bank which is on the verge of bankruptcy?

The introduction of FRDI Bill

The Financial Resolution and Deposit Insurance Bill (FRDI Bill) was introduced in the Lok Sabha on 10th August 2017. The objective of the bill was to provide a structural framework which would help banks, financial institutions and insurance companies deal with insolvency and bankruptcy. This Bill aimed at providing an easy way out for eligible financial institutions that are in a financial crisis. According to the proposal of the FRDI Bill, a Resolution Corporation would be established which would have complete authority regarding mergers, transfer of assets, integration of property of the financial institutions which are nearing insolvency.

Role of the Resolution Committee

The Resolution Committee was to handle a sick institution before it becomes completely bankrupt. The role of the Resolution Committee would be to classify the financial firms in five categories based on their financial condition. These categories are as follows –

• Low
• Moderate
• Material
• Imminent
• The critical risk to viability

The financial risk of the institution would be evaluated considering the following factors –

• Assets and liabilities of the institution
• Capital adequacy
• Management capability
• Quality of assets
• Leverage ratio
• Sufficiency of earnings
• Liquidity of the firm, etc.

The Resolution Committee would, therefore, make its assessments and then take measures to salvage an ailing financial institution.

Proposals mentioned in the FRDI Bill and their effects on your deposits

Various proposals were mentioned in the FRDI Bill and each proposal has an impact on your deposits. These proposals and their effects were as follows –

1. Proposal: non-withdrawal of deposits

   Under the proposed rule under the FRDI Bill, you would not be able to withdraw your bank account balance as per your requirement if the bank is in distress.

   It’s effect:

   Currently, you can withdraw your account balance whenever you require as per the provisions of the Deposit Insurance and Credit Guarantee Corporation Act, 1961. But with this rule, your control on your deposits would be lost.

2. Proposal

   Your account balance can be converted to fixed deposits by banks and such deposits would be paid after five years

   It’s effect:

   If your savings account or current account balance is converted to fixed deposits, you would lose liquidity and face problems when you need money.

3. Proposal:

   To bail out an ailing bank your account balance can be reduced. The bank can reduce your account balance substantially.

   It’s effect:

   If your account balance is reduced drastically, you would lose your hard-earned money invested in bank accounts.

4. Proposal:

   If the bank is in a financial crisis, it has the power to decide how much and in which mode your investments would be returned.

   It’s effect:

   You would have no knowledge of how your money would be handled by the bank and whether you would get the full amount that you have invested. This would create chaos as there would be no security.

5. Proposal:

   The bank can give their stocks to customers against the value of their deposited money.

   It’s effect:

   Even if you get the stock of the bank, the stock would be exposed to market volatility. This volatility was not present when your money was in the bank account. This measure would not be feasible for risk-averse individuals who don’t like market risks.

6. Proposal:

   The insurance cover given to accountholders would depend on the account balance maintained by the holders.

   It’s effect:

   Account-holders are given a uniform level of insurance coverage by banks irrespective of their account balance. The insurance cover was for INR 1 lakh. However, with the new rule, the cover would depend on the financial status of individuals. Rich accountholders can enjoy higher coverage while middle-class accountholders would be given a low cover. This would discourage middle-class individuals to keep their deposits in bank accounts.

   The FRDI Bill is supposed to strengthen the framework of handling ailing and insolvent financial institutions. However, it has negative impacts on bank deposits and other bank accounts that you have. Given these negative impacts, the FRDI Bill was open to debates and negative reactions from all sectors. That is why the Government later announced that the FRDI Bill would be dropped. Though currently, the FRDI Bill is not under the proposal, you should know the proposals presented by the Bill and how such proposals would have affected your deposits.

Frequently Asked Questions:

1. How does the insurance cover given by banks work?

   As per the applicable provisions, bank deposits like a savings account, current account, fixed deposits, recurring deposits, etc. are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC). The insurance cover is given for up to INR 1 lakhs on your deposit balance. This means, that if you have a savings account and a fixed deposit account in a bank and the total balance of these accounts (including interest) is INR 80,000, you would get coverage for INR 80,000. Even if the bank is wound up, you would get INR 80,000 against your deposit accounts. However, if the balance in the deposit accounts is more than INR 1 lakh, coverage would be available only up to INR 1 lakh.

2. Can I enjoy multiple insurance cover?

   If the bank account is maintained under different names, you can enjoy multiple insurance cover on each account. For instance, you might have a bank account in your maiden name and another in your married name. In that case, each account would be able to enjoy insurance cover of up to INR 1 lakh.

3. Can the FRDI Bill be reintroduced?

   The reintroduction of FRDI Bill depends on the Government. The Government might modify the FRDI Bill and introduce it in future if it is feasible for all the segments of the economy.

What is Marine Insurance all about?

Insurance is an important aspect of growth and success of any business. Financial consequences of unexpected mishaps can get your cherishing business to halt. Having insurance coverage provides protection against unforeseen happenings and various risk involved in the business. Marine insurance is one of the oldest form of insurance that businesses, especially shipping and cargo companies started availing in the 17th century. In this article, let’s learn more about marine insurance and its types.

What is marine insurance?

Every cargo or the ship that carries goods is of value. Irrespective of the value of goods, if there is any unforeseen event happens and the cargo or ship is lost or damaged, it becomes a financial liability for ship owners, shipping companies or to cargo owners. This is when the marine insurance comes in for the rescue. Marine cargo insurance is the most common method used to avail security for your goods from damages, theft or general average etc.

Marine insurance is a type of insurance plan that provides protection to the owner of cargo or ship or to the shipping company against various marine risks. Marine insurance mitigates the risk of loss in an unforeseen event like an accident, loss of life or damage to the property etc. In simple terms, marine insurance provides security to your goods while they are in transit via inland water, road, rail, air, registered post or by courier.

Who needs marine cargo insurance?

Marine insurance can be purchased by import and export merchants, buyers, sellers, buying agents, selling agents, contractors or banks or anyone involved in import and export transactions or domestic transportation of goods. Who needs to buy marine insurance is decided by the nature of the contract. Some of the common contracts of sales are:

• Free on Board (FOB)
• Cost & Freight (C&F)
• Cost, Insurance and Freight (CIF)

In FIB and C&F contracts, the buyer is responsible for buying the insurance. While, in CIF contracts, the seller is responsible for buying the insurance.

Why marine insurance is needed?

While you are in the business of supplying goods or transporting goods of value, it’s important to be covered financially against the potential losses that may arise due to various risks involved in transit. As your goods are the source of revenue for you, securing them ensures continuity and growth of your business. Not just for business, individuals moving their goods from one place to another for personal or professional reasons, securing the valuables while in the transit is extremely important to avoid the financial repercussions of any unfortunate losses or damage. Hence, marine insurance is an important requirement to maintain financial integrity.

Types of marine insurance

Marine insurance policy comes in many variants. Coverage under a marine insurance policy can be customised based on the requirement of the business. Following are the major marine insurance policies available in the market:

1. Hull insurance

   Hull insurance is a type of marine insurance designed to cover the damages to transportation vessels such as damages caused to ship or boat, its equipment and machinery.

2. Cargo insurance

   Cargo insurance provides coverage against all potential risks to the cargo or goods that are in transit from one place to another.

3. Freight insurance

   Freight insurance is a common form of marine insurance that offers extra protection to goods that are being transported from one place to another. Usually, vessel operators are at a loss of freight receivable in case the goods are lost or damaged in the transit. Freight insurance gives them the protection against loss of freight suffered.

4. Liability insurance

   Marine liability insurance provides liability coverage in the event of vessel collisions. Marine liability insurance also provides coverage against liabilities arising from injury, property damage or loss of life of the third party involved.

   Apart from these, there are various other types of marine insurance policies that can be availed on unique requirements. Following are some of the marine insurance types available:

5. Voyage policy

   Voyage policy offers coverage for marine risks during a specific voyage. As soon as the ship arrives at the destination, the policy will expire.

6. Time policy

   Time policy is a marine insurance policy that is valid for a specific time period. Generally, time policies are valid for a year.

7. Valued policy

   In valued policy, the value of cargo or the goods being transported is ascertained at the beginning. In the event of loss, ascertained value is paid as claim compensation.

8. Port risk policy

   Port risk policy covers the loss suffered by the ship while it is stationed in the port.

9. Floating policy

   Floating policies are bought for lump-sum value covering multiple voyages. This policy is suitable for businesses that transport goods frequently.

10. Open or unvalued policy

    In open policy, the value of goods will not be ascertained initially but the loss suffered will be estimated in the event of loss.

Benefits of marine insurance

There are various benefits of availing marine insurance. Some of the major benefits are as follows:

1. Marine insurance helps to maintain financial integrity and stability of the business
2. It helps to manage and reduce various risks associated with the shipment of goods and helps to conduct business without any hassles.
3. Marine insurance compensates the financial loss that the business may face due to loss or damage to goods during transit

Coverage offered under marine insurance

Following are the coverages offered under a marine insurance policy

1. Institute cargo clause (C) – covers below named perils
   1. Fire and explosion
   2. Overturning or derailment of land conveyance
   3. Stranding, grounding, sinking and capsizing of the vessel
   4. Discharge of cargo at the port of distress
   5. The collision of vessel or conveyance with any external object other than water
   6. Jettison
   7. General average sacrifice
2. Institute cargo clause (B) – covers below named perils
   1. Washing overboard
   2. Eruption, lightning, earthquake or volcanos
   3. The entry of sea, river or lake water into the craft, vessel, conveyance or lift van or to the place of storage
3. Institute cargo clause (A) – Covers all risks both named and unnamed pertaining to the transportation of goods

Many marine insurance policies offer additional coverages at an extra cost of the premium.

Exclusions in marine insurance

Marine insurance policy is customisable with a wide range of extensive coverage options it offers. However, there are certain exclusions to the policy. Following are the major exclusions in a marine insurance policy:

• Wilful and planned act of negligence and misconduct
• Delayed shipment
• Poor and improper packaging
• Insolvency or bankruptcy of the shipping line
• War, strikes, riots and civil commotion
• Wear and tear of cargo
• Removal of wreck
• Contamination due to radioactive rays

#4 Tips for identifying the best marine insurance plan

Following are the tips for identifying the best marine insurance plan

1. Ensure to avail the marine insurance coverage from trusted insurance brand. Do your research on the insurance company’s past records and credentials
2. Check the nature of coverage offered by the policy and ensure it matches your need
3. Compare the benefits of marine insurance plans offered by various insurance companies and then choose the plan based on cost-benefit analysis
4. Read through the fine prints and understand the inclusions and exclusions of the policy thoroughly.

Documents required for marine insurance registration

At the time of registering marine insurance claims, following are the documents required:

1. Duly filled and signed the claim form
2. Original insurance certificate
3. Estimated loss report
4. Bill of lading copy
5. Survey report
6. Shipping specification with a packing list
7. Original invoice
8. Details of correspondence exchanged

Frequently Asked Questions (FAQs)

1. What is ‘General Average’ in marine insurance?

   General average refers to losses that may arise due to voluntary sacrifice of any parts of the cargo or the ship in order to safeguard the ship or the rest of the cargo.

2. What is ‘bill of lading’?

   Bill of lading is the most common form of a document issued by a carrier to acknowledge the receipt of cargo for shipment.

3. How should the insured act in the event of loss or damage?

   In the event of loss, insured should first take preventive measures to reduce the impact of an event. Insured must act the same as the case the goods were uninsured. To claim the losses, insured must immediately notify the insurance company about the loss or damage.

4. What is ‘Free on Board’ (FOB) contract?

   The free onboard contract refers to the contract in which the seller is required to deliver the goods at his cost through a specific route to the destination as designated by the buyer. In this risk transfers from seller to buyer at the FOB point.

5. What is Cost, Insurance and Freight (CIF) contract?

   In CIF contract, cost insurance and freight expenses are borne by the seller in order to cover the buyer against possible losses or damage to goods in transit.