Cooperative Housing society is a group of members who work collectively for the benefit of the Society hence any losses and/or Profits are shared in proportions to the shares held.
As per the Society Bye Laws Insuring the property held by the Cooperative Housing society is mandatory, which is predominantly the Building structure and Utilities need to be Insured against Fire Insurance.
In India we find that the rules and regulations are observed as obligation rather following by its SPIRIT. In the instant case, to avoid compliance issues the Committee decides to go ahead with insurance of the Building Structure and other properties held by the society and competitive quotes are requested through various sources. Instead of going into details of the coverage offered the decision makers select the lowest premium quotation and further to that, sometimes lower the Sum Insured to reduce the premium cost. The same is basically out of a misconceptions that ‘Nothing will to our Society Strcuture’, hence yearly premium paid is a waste and creating an unnecessary load on Society Funds.
People have forgotten that yearly there are many instances of Fires in Housing Society due to short circuits and other reasons. In 2019 itself almost all the states have suffered Extensive, Devastating floods and they were very impartial with respect to their effects. In fact in Metros like Mumbai only the Residential areas were affected where maximum Residential Buildings are there. A City like Mumbai is always scared about the Terrorist Attack and although of less severity, off late the Earthquakes have become quite often.
Like people have now realized that Family Health Insurance is important from the perspective of Financial Planning of an individual or a Family, in the same manner the Society Insurance, that too ‘Adequate Society Property Insurance’, is of utmost importance from the perspective of Financial Well being of the Cooperative Housing Society.
While paying premium we may save few thousands however by not insuring the property adequately at the time of claim the society may lose in lakhs by way of Deduction towards Under Insurance in claim assessment and may tumble the financials of the Cooperative Housing Society.
Most important thing to note that Global warming has affected the nature’s Cycle adversely hence the operation of Natural Perils has become quite obvious !!
In case of any queries, please write to the undersigned.
Warm Regards,
L N Shanbhag,
+91 9833-63-5512 / laxminarayan@spectrumadvisors.in
