Published in Mint on 4th June 2018. Written by Abhishek Bondia.
I live on the third floor of a DDA flat in New Delhi. Recently one of the pots that I keep on my terrace fell down on the second floor. Though no one was hurt, my neighbor on the second floor is alleging that he could have been killed. Is there any way to insure against such a situation?
—Saroj Sharma
You can cover against injuries caused to a third party because of your negligence. A public liability policy covers the such risk. If a third party is injured or suffers damage to his physical property, the policy will cover it. It will pay for a lawyer’s cost to defend yourself in court and any compensation awarded by the court. In some cases, at the insurer’s discretion, the insurance may reimburse an out-of-court settlement as well. The policy gets triggered only after a legal notice is served to the insured.
Public liability is available as an add-on cover to most home insurance policies. Typically, as an add-on, the cost is around ₹5,000 for a ₹1 crore cover. On a stand-alone basis, the cost may go up to ₹10,000. Such policies typically have a deductible of ₹50,000 to ₹1 lakh. So, in effect, small domestic disputes do not get covered.
I am buying a new car. Should I buy insurance through the car manufacturer, or on my own? How should I compare the two?
—Mythele Sen
Motor insurance has two components—third-party liability and own damage.
Premium and coverage for third-party liability insurance are common across all insurers and channels.
On your own damage, you should compare three major aspects. First, assess the number of garages where a cashless facility is available via the insurer. The cashless settlement would ensure a smooth claim experience. Second, compare the add-ons offered by various insurers. Opt for a policy with a higher number of add-ons. Specifically look for zero depreciation cover, insurance for consumables that are not covered by the basic cover, and a hydro-static lock for the engine cover. Third, all things being equal, opt for the cheaper cover. No-claim bonus would be accrued and applied across all insurers.
Often, some car dealers tend to club insurance premiums with the cost of the car. You should insist on the break-up to make a fair comparison.
What is the tax treatment for keyman insurance both for premiums and maturity amount?
—Seema Chauhan
Keyman insurance has to be term insurance. So there is no maturity amount. Premiums paid for keyman insurance by a company are considered a business expense and allowed as a deduction while computing taxable income. The policy amount received in case of the death of the keyman is taxable income in the hands of the company.
Tax exemption of Section 10(10)D is not applicable to keyman insurance policies.
