Can a tenant buy separate home insurance for the overall flat?

I am tenant in a multistoried apartment. My residents’ welfare association (RWA) buys insurance for the structure of the building. Should I look at buying a separate insurance policy for the contents for my flat? Can a tenant buy insurance for the overall flat?

—Name withheld on request.

Insurance can be bought only if you have an insurable interest. This means that you should suffer a loss should the property be damaged. As a tenant, you have an insurable interest in the contents of the house but not on the structure. The structure is owned by the landlord. Only the owner of the property can buy insurance for the structure. RWAs represent a group of owners, so even they can buy the insurance. However, a tenant can buy home insurance only for the contents of the house. It is possible for you to buy standalone home insurance to cover only the contents. The same should be clearly specified in the policy.

Recently, one of my professors who was less than 55 years old passed away. He had some chronic conditions. A few months ago, he suffered a brain stroke. Later, he underwent an angioplasty, some treatment for lungs infection and management of bed sores. He was in the hospital for a continuous period of 80-plus days including a few days on the ventilator. His total hospital bill crossed ₹1 crore, and his health insurance coverage of ₹20 lakh fell substantially short. Aside from the feeling of loss, I am worried about having the right amount of health insurance coverage. I am 40 years old with no chronic illness. How should I approach my health insurance?

—Name withheld on request.

Medical costs have increased substantially over the years. Additionally, there is an increased incidence of illnesses, both minor and critical. It is now more common to hear cases of extended hospitalization due to complications driven by multiorgan issues with unclear diagnosis and prognosis. Such a scenario has dismissed the erstwhile assumptions about decent levels of health insurance.

Often, people just look at the absolute amount of coverage in isolation and assess its adequacy. This amount is driven by heuristics and could vary from ₹5 lakh to ₹20 lakh. Medical costs, however, are linked a lot to lifestyle. The incidence rate of chronic illness and the cost of treatment vary substantially by lifestyle. That’s why one should decide the sum assured for health insurance holistically.

I recommend buying a base sum assured of at least equal to one’s annual income. Further, the health plan should allow you to accumulate substantial no-claim bonus—100% or more. Over a few years, the aggregate coverage for you would be equal to twice your annual income. This should be sufficient to cover an average individual. The base sum assured should be enhanced if the person suffers from a chronic illness such as blood pressure or diabetes. The level of cover should be re-evaluated every 3 to 4 years, based on increased income, health condition and medical costs.

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Apart from regular health insurance, I strongly recommend considering a critical illness insurance. Such plans are fixed-benefit plans, so they pay over and above the regular health insurance plan. When a person gets diagnosed with a specified critical illness, the sum assured is paid out in a lumpsum. Commonly covered critical illnesses include stroke, cancer and heart attack.

A right combination of health insurance and a critical illness plan would cover exigencies like the one you described.

Abhishek Bondia is principal officer and managing director at SecureNow.in.