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Embedded Insurance – Insuring the Homeowner’s Dreams

Roti, kapda, aur makaan – the holy trinity of every Indians’ dreams. As a country, we have come a long way from struggling to achieve the basic necessities of roti and kapda. However, ‘buying a house’ continues to figure in most people’s financial plan – that one elusive goal that nearly everyone wants to achieve. Inevitably, many individuals start saving up for buying their dream home as early as possible. They judiciously invest a portion of their income over a period of time to accumulate sufficient funds for purchasing or building a home. Further, for individuals and sometimes even families, the house is usually the most expensive and treasured asset. Thus, don’t you think that once this dream is achieved, it is important to protect it?

This is where a home insurance policy can really add value and help individuals protect their dreams.

Protect your Most Valuable Asset

A home insurance policy, also called homeowner’s insurance, is a type of insurance policy that extends financial security to the policy owner in case of damage to the insured property. Broadly, a home insurance policy can fall under the following structures.

  • Comprehensive home insurance: Under this policy, the house in terms of the structure along with the contents within are protected from both natural as well as man-made disasters. This means that any damage caused to the property from natural calamities such as earthquakes, floods, etc., will be covered by the policy along with any harm that stems from vandalism, theft, riots, etc. It allows homeowners to financially recover from the loss and rebuild their dream home.

  • Structure insurance: In this type of homeowner’s insurance policy, any damage caused to the structure of the home from natural calamities such as earthquakes, lightning, fire, etc., along with man-made problems such as riots, theft, vandalism, etc., will be covered.

  • Content insurance: This type of home insurance policy only covers the damage or loss of contents that are inside the house. These contents could include electronics, jewelry, etc. The amount of coverage that is given depends on the market value of the damaged or lost content.

The above are just the basic structures offered. Based on requirements, several insurers also offer very nuanced policies.

Every Homeowner should consider purchasing a Home Insurance Policy

The biggest benefit of purchasing a home insurance is that it covers the financial loss in the event of damage caused to a prized possession. The other benefits include:

  • Access to financial support for repairing the home incase of damage stemming from unfortunate and uncontrollable events.

  • In the event that the damage is caused by a third-party, legal issues can be avoided simply by claiming insurance.

  • Several banks prefer extending a home loan for property repair/construction/extension if the said property is insured.

  • Coverage can be extended to the contents of the house including furniture, electronics, jewelry, appliances, etc.

  • The coverage is available to cover damages that stem from natural disasters as well as from man-made events like theft, riots, etc.

  • Home insurance policies that cater to specific requirements are also available. For example, one can purchase a landlord’s insurance and claim for damage caused by the tenant. On the other hand, one can also purchase a tenant’s insurance to cover his/her own belongings in a rented accommodation.

Despite these myriad benefits, the number of people who actually opt for home insurance is fairly low. As a matter of fact, home insurance penetration in India is just about 1%. Countries like the US, UK, France, Australia and China have home insurance penetration in the range of 90-97%. This creates a huge opportunity for service providers in the real estate ecosystem.

Homeowner's Insurance Added to the Core

For a homeowner, the easiest thing would be to purchase the home insurance policy at the time he/she is purchasing the property. During the home purchase journey, a homeowner interacts with multiple stakeholders. Let’s map this.

Assume Mr. Shah wants to purchase a flat in Bandra (Mumbai). His first step is to log on to the many aggregator websites, check the properties available, and compare the offerings along with the rates. Let’s say that through a website he contacts a broker who takes him to an under-construction building in Bandra East. Mr. Shah likes the flat, does a meeting with the builder’s salesperson, and is ready to commit. Then he starts the home loan process. Again, he goes to multiple websites, compares the rates, tenures, and flexibility offered by different banks to finally settle on Bank A. They start the paperwork and then within 2 weeks his loan is sanctioned. He proceeds with the purchase of the house. Now, in this entire journey, at no point did he consider buying a home insurance policy. There could be two reasons for it. One, he probably is not aware of it, or two, he was simply not nudged towards it. This is where other ecosystem stakeholders could add immense value by offering homeowners insurance as a part of the entire transaction.

For example, the aggregator website could embed homeowners insurance and offer it to Mr. Shah at the point when he had closed the deal with the broker. It could enable Mr. Shah to compare homeowner insurance policies from several insurance providers and then embed the cost of purchasing the insurance policy in its cost or fee. Or, the real estate company could offer embedded home insurance to Mr. Shah at the time the purchase agreement was signed. Since all the relevant paperwork was already done, all the real estate company needed to do was embed the cost of insurance in the transaction value. And finally, the bank can offer homeowners insurance as a part of the loan package. Just as the bank enables Mr. Shah to avail a home loan, it can also enable him to compare home insurance policies across providers and then seamlessly purchase the policy from the bank itself.

If seamless access to home insurance was offered to Mr. Shah at any point on this journey, by any of the above-mentioned stakeholders, then it is likely that Mr. Shah would have purchased the insurance policy. For stakeholders like the aggregator platform, real estate company, and the bank, it would have been a good opportunity to enhance their value proposition and offer the customer a little more than expected.

The best thing is that with Turtlefin, embedding insurance in the core offerings has now become very easy. The Turtlefin OneAPI allows you to offer insurance to your clients in a seamless plug-and-play manner. You don’t need to worry about building any technology infrastructure or even have tech expertise to offer insurance as a valuable add-on to your core offering. Further, while the APIs make the adoption seamless, Turtlefin would still handhold you through the integration process and ensure that you are able to efficiently offer your customers insurance policies from multiple insurers.

Choose to sell more than just dreams. Choose to help people insure their dream home.



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