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Mandatory home insurance likely; costs to rise 2-5%

The government is planning to make home insurance mandatory for developers to ensure that buildings are structurally sound enough...

Written by Varunsoni | New Delhi |
July 14, 2007 1:14:29 am

The government is planning to make home insurance mandatory for developers to ensure that buildings are structurally sound enough to withstand earthquakes and fire. According to government sources, a clause to this effect will be included in the real estate management Bill to be discussed by the Cabinet shortly.

Once home insurance becomes mandatory for developers, insurance companies will be able to exert checks and balances on realty developers and view a building design critically. In fact, the premium will be lower if the building adheres to better earthquake resistant technologies and vice versa.

The move will save customers the trouble of getting their homes individually insured, as that will be taken care of by the builder. Though this does mean that the builder will pass on the cost of home insurance to the customer, thereby increasing the cost of an apartment by 2-5 per cent.

“This is a small cost for safety,” says Sandeep Donald Shah, director, Taylor Devices (India), a multinational that deals in earthquake-proof technology. “This will result in a better product for the end-user. In fact, developers following the Indian seismic code will design their projects so as to adhere to the collapse prevention level.”

Experts feel the step shows the government’s seriousness in ensuring earthquake safety and that builders construct earthquake resilient structures. Even urban development secretary M Ramachandran reportedly visited Japan recently to see how earthquake protection technology has been put to use in that earthquake-prone country.

Another important initiative is that financial institutions will now consider the compliance with seismic safety standards before offering housing loans, including those for construction of multi-storeyed complexes. In fact, the housing development programmes supported by the Centre and state governments, as well as all large-scale housing schemes, will be made to comply with earthquake-resistant design and construction practices.

The design of all structures will now have to go through a mandatory compliance review by a panel of professionals. Self-certification for all structures will be an integral part of the approval process for building plans under which all professionals involved in different aspects of building safety certify compliance.

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