Housing Society Insurance

What is housing society insurance?

Housing society insurance is a set of policies bought by a cooperative housing society, resident welfare association (RWA) or apartment owners' association (AOA) to protect the common building and equipment it manages and the liabilities it carries. It typically combines a fire and allied perils policy on the structure, breakdown cover for plant, public liability, fidelity, money and directors' and officers' cover for the managing committee.

It is the foundation of our property insurance practice. MILES protects 350+ large housing societies, so we have seen how cover, valuations and claims actually play out in gated communities and high-rise complexes.

What a society should insure

The building and common property

• Tower structures, basements, podiums, parking decks, internal roads, boundary walls and gates
• Lifts and escalators
• DG sets, transformers, HT and LT panels, and solar installations
• Sewage treatment plants, water treatment plants, pumps and underground tanks
• Fire hydrants, sprinklers, fire pumps, alarms and detection systems
• Clubhouse, gym equipment, swimming pool plant, furniture and common-area fit-outs
• CCTV, access control, intercom and building management systems

These are insured against fire, lightning, explosion, storm, flood, earthquake, riot and malicious damage, and the other perils in the standard fire wording. Terrorism is an add-on worth taking for large complexes. The individual flat interiors and residents' belongings are the owners' responsibility, usually under Bharat Griha Raksha or a householder's policy.

Plant breakdown

A fire policy does not pay when a lift motor burns out, a DG alternator fails or an STP blower seizes. Machinery breakdown and electronic equipment policies cover sudden internal failures of this kind, and for a society with dozens of lifts they often see more claims than the fire policy.

Liability and people

• Public liability: a child injured in the pool, a visitor hurt by falling façade material, a car damaged by a collapsing tree. See public liability insurance.
• Directors and officers: committee members are volunteers, yet they face complaints over tenders, maintenance charges, elections and vendor disputes. D&O liability cover pays defence costs and awards.
• Fidelity guarantee: protects against fraud or embezzlement by accountants, managers or staff who handle society money.
• Money insurance: covers cash in the society office safe and cash in transit to the bank.
• Employees' compensation: for staff employed directly by the society. Where a facility management agency supplies staff, check that the agency holds its own cover.

How the sum insured is decided

The building must be insured for its reinstatement value: the cost of rebuilding the structure today, including foundations, services and professional fees, but excluding land. It has nothing to do with the resale price of flats. A practical method is total built-up area multiplied by a current per-square-foot construction rate for that specification, with equipment added at replacement cost.

Many societies carry forward the developer's figure from years ago, or insure only the amount in the maintenance budget. After a serious loss, an inadequate value means the claim is reduced and the shortfall falls on residents through a special levy. We recommend a fresh valuation every few years and an equipment register that is updated whenever assets are added.

Handover from the developer

The developer's construction and fire policies usually end at completion or at handover. There is often a gap of weeks or months before the new association arranges its own cover, and losses in that window are hard to recover. At handover, a society should:

• obtain copies of the developer's policies and confirm the date cover ends;
• collect the asset register, OEM warranties and AMC contracts for lifts, DG sets and STPs;
• record defects and snags, since insurance does not pay for faulty construction;
• place its own programme to start the day the developer's cover stops.

How RWAs and AOAs should buy

• Get the managing committee's or general body's approval for the scope of cover, not just the premium budget.
• Ask for quotes on the same valuation and scope from several insurers, so the comparison is fair.
• Compare deductibles, sub-limits for lifts and plant, and add-ons, not only price.
• Keep all policies on one renewal date and record them in the society's minutes.
• Appoint one committee member as the insurance contact for claims.

How a claim works

1. Make the area safe and stop further damage, such as isolating water or power.
2. Inform MILES and the insurer the same day, with photographs and a short description.
3. File a police complaint where theft, malicious damage or an injury is involved.
4. Keep damaged parts until the surveyor has inspected them.
5. Submit repair estimates, AMC reports, invoices and the committee's authorisation.
6. The surveyor assesses the loss and the insurer settles to the society's account.

How MILES helps

• We have worked with 350+ large housing societies, so we know the common gaps in society programmes.
• We prepare a reinstatement valuation and equipment schedule the committee can defend at the AGM.
• We compare quotes across 16+ insurers on identical terms and present them in a format residents can follow.
• We manage claims from first call to settlement. Across all property business, we have settled 500+ claims and handle 40+ a year. See our claims support.

Cover, exclusions and premiums depend on the insurer’s policy wording and underwriting. MILES Insurance Brokers Pvt. Ltd. is an IRDAI-licensed direct broker (Life & General, Reg. No. 954); the insurance is issued by the insurer. Insurance is the subject matter of solicitation.