Earthquakes occur frequently in and around India. This is because the region is seismically active due to the collision of the Indian and Eurasian tectonic plates. Of late, there has been an increase in the recorded number of earthquakes, especially smaller ones. Not just earthquakes, India is increasingly hit by climate extremes – from floods and cyclones to heatwaves. Despite this, riders like earthquakes and landslides are not so popular. According to Susheel Agarwal, founder and CEO of Ethika, consumers must not assume that basic policies cover disasters. He also emphasised that policyholders must purchase an extra rider or a special “natural calamity” add-on to their primary policy to secure protection against such events.
In an email interaction with India TV, Agarwal discussed why people tend to underestimate rare risks and why these coverages matter. Agarwal also discussed new regulations that mandate mental health coverage on par with physical health coverage. Here are the edited excerpts:
Que: Why are earthquake and landslide riders so unpopular, and why do they matter?
Susheel Agarwal: Many homeowners skip disaster riders (earthquake, landslide, etc.) due to a mix of psychological and practical reasons. In plain terms, people tend to underestimate rare risks, find extra cover costly or confusing, and often don’t realise these perils aren’t covered by default. Yet India’s high risk of quakes and landslides makes these riders very important. Key points:
Reasons for Low Popularity:
• Optimism bias: Many of us feel “it won’t happen to me.” People routinely underestimate their chances of disasters. This mindset leads owners to skip buying protection against events they think are too unlikely.
• Cost concerns: Earthquake/landslide covers are sold as optional add-ons. To save on premiums, buyers often decline these riders. Surveys find a large share of Indians regard home insurance as expensive. In reality, covering a Rs 1 crore home might cost only a few thousand rupees per year, but the perception of high cost still deters many.
• Lack of awareness (and complexity): Most people aren’t aware that standard home/fire policies exclude quakes and landslides. For example, standard fire policies explicitly exclude earthquake damage unless you buy a rider. Likewise, basic plans often omit landslides. Studies show “people still have low awareness about home insurance”, and confusing fine print or jargon makes them hesitant to add cover. Many only discover the gap after a disaster has already struck.
Why These Coverages Matter
• High disaster risk in India: A large part of India lies in earthquake-prone zones. NDMA reports that about 59% of India’s land faces moderate-to-severe seismic hazard. Hill regions (Himalayas, Northeast, Western/Eastern Ghats) are especially prone to quake-triggered landslides. Monsoon rains regularly trigger floods and landslides that can level homes. For example, the 2023 Himalayan floods/landslides alone caused over Rs 100 billion in damage. These frequent disasters mean the risk is real, not just a remote worry.
• Protecting your biggest asset: For most families, a home is the single largest investment. A strong quake or landslide can destroy it in minutes. Buying these riders costs very little compared to that loss: under the IRDAI’s standard Bharat Griha Raksha policy, insuring a ₹1 crore home costs only a few thousand rupees a year. In other words, for the price of a few extra cups of coffee per month, you safeguard years of savings and hard work.
• Financial safety net: Home insurance (with disaster riders) provides an affordable layer of protection for your finances. Experts stress that a good home policy is “just as critical as life or health insurance” for financial
stability. If you skip these covers and a catastrophe hits, you risk total financial ruin – whereas with insurance, you get compensation to rebuild. In short, the small extra premium is a safety net against losing everything.
In summary, riders for earthquakes, landslides and similar perils may seem optional, but they fill crucial gaps. Given India’s high hazard levels, paying a bit more for these add-ons can save you from devastating losses.
Que: What’s covered under mental health and alternative care?
Susheel Agarwal: Recent regulations now mandate mental health cover on par with physical health. Under the Mental Healthcare Act, 2017 (effective May 2018) and IRDAI directives, all health insurance products must include mental illnesses without discrimination. Common covered conditions include depression, anxiety disorders, bipolar disorder, schizophrenia, OCD, and similar psychiatric illnesses. Coverage typically extends to inpatient care: if hospitalisation is required for a mental health condition, insurers pay for the cost of treatment (room, doctor’s fees, medicines, diagnostics, etc.) just as they would for a physical ailment. Standard plans also cover related expenses such as pre- and post-hospitalisation care (Follow-up consultations, therapies. Some newer policies even offer OPD (outpatient) therapy and counselling sessions under their mental health benefits.)
Crucially, IRDAI has instructed insurers to remove any blanket exclusion of mental illnesses. In fact, a recent circular clarified that “all insurance products shall cover mental illness and comply with the provisions of the MHC Act, 2017, without any deviation”. (Note: the Act itself explicitly excludes mental retardation/intellectual disability, so those are generally not covered)
Alternative Care (AYUSH)
Health insurers increasingly cover alternative (AYUSH) therapies as well. IRDAI began allowing AYUSH coverage in 2013, recognizing Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homeopathy as eligible treatment systems. Today, most general and health plans include inpatient AYUSH treatment on par with conventional care. That means if you are hospitalised for an AYUSH therapy in a government-recognised AYUSH hospital, the costs (procedures, room charges, medicines, etc.) are payable under your policy.
• Facilities: To claim AYUSH benefits, treatment must be in a government-approved AYUSH hospital or institute, with a minimum 24-hour hospital stay. (Standalone AYUSH clinics or short “wellness” visits are usually not eligible.)
• Coverage limits: AYUSH expenses are typically covered up to the policy’s sum insured. However, some insurers impose a sub-limit for AYUSH – e.g. a fixed cap or percentage of the sum insured. Always check your policy for any AYUSH claim limit.
• Regulatory stance: IRDAI guidelines now require insurers to formally include AYUSH cover on an equal footing with other treatments. In practice, this means no extra premium for AYUSH (it’s part of the standard health cover), although the exact terms (limits, approved hospitals, etc.) are defined in each plan’s policy wordings.
In summary, insurance in India now broadly covers both mental health and AYUSH care. Mental illnesses are insured like any other disease (hospitalisation costs, etc.), and alternative-system hospital treatments are reimbursable if done in licensed AYUSH facilities. Policyholders should, however, review their plan details for specifics such as covered disorders, hospital networks, and any AYUSH sub-limits.
Que: How can consumers select the right policy tailored to their life stage, income, and geography?
Susheel Agarwal: Selecting health insurance depends on your personal situation – not just price. Key factors include your age/family stage, income, and where you live. Generally, young healthy adults can start with modest cover, while growing families and seniors need much larger plans. Below is guidance by life stage, income level, and geography, with expert sources:
• Young & Single (20s): When you’re young and healthy, premiums are low and you have fewer medical claims. It’s wise to buy at least a basic plan with a moderate sum insured (experts suggest roughly Rs 10 lakh minimum) to guard against rising healthcare costs. Starting early also builds up no-claim bonuses and completes waiting periods while you’re young. (For example, PolicyBazaar notes that in Tier-3 cities Rs 5 lakh may suffice but in Tier-1 one might need Rs 10–20 lakh.)
• Newly Married/Couples: After marriage, a family floater policy (covering you and your spouse under one sum insured) is usually most cost-effective. Such plans save premiums by sharing coverage. If you plan to have children, add a maternity rider before pregnancy – these riders have waiting periods, so include them early. A floater with maternity and newborn cover will protect against delivery and infant care costs. Always check the floater’s sum insured is high enough for two people and any future kids.
• Family with Children (30s–40s): As dependents grow, so do health needs. Increase your family floater cover significantly – e.g. to Rs 20–25 lakh or more – and consider a super top-up policy. A super top-up only pays once your base sum insured is used up, giving very high cover at a low extra premium. For a family of four, experts often recommend at least ₹10 lakh cover (and realistically much more). Stacking a top-up on your base plan ensures high protection for major surgeries without breaking the bank.
• Approaching Retirement (50s+): In your 50s and beyond, illness risk climbs sharply. Look for a comprehensive plan with very high sum insured (Rs 25 lakh or higher) and strong add-ons for critical illnesses. These years often require the most medical care. Choose policies with lifelong renewability and no/minimal co-payment, so you don’t pay much out of pocket. In fact, seniors are advised to avoid plans with co-pay clauses, since they’re more likely to claim. A policy tailored for older adults (or a floater including parents) should cover major treatments fully and include things like annual health check-ups.
Income Level and Coverage
• Moderate Income: For budget-minded consumers, the IRDAI’s Arogya Sanjeevani policy is a good starting point. This standardized health cover (with sums insured from Rs 1–5 lakh) is designed to be affordable and essential, making basic protection accessible to many income levels. It covers hospitalisation, pre/post-care, and daycare procedures, helping secure essential coverage without complex add-ons. Its low-premium structure makes it suitable for moderate budgets.
• Higher Income: If you can afford larger premiums, opt for high-sum policies. Experts note that Rs 1 crore health plans are now quite affordable and practical for major care or international treatment. A typical approach is a big family floater (or individual) plan of Rs 50 lakh+ combined with a super top-up to reach Rs 1 crore or more. This covers even very costly procedures without straining your savings. In effect, higher income allows buying top-tier protection so that no major claim drains your wealth.
Geography (City of Residence)
• Metro/Tier-1 Cities: Living in a major city means higher hospital and doctor fees. In metros like Mumbai, Delhi or Bengaluru, it’s advisable to aim for at least Rs 15–20 lakh (and ideally more) in cover. One analysis suggests that in Tier-1 areas, you may need to bump coverage to Rs 10–20 lakh for good protection. In practice, many urban families choose Rs 30 lakh+ floater plans to be safe. Insufficient coverage can quickly be exhausted by a single hospital stay in these cities.
• Tier-2/Tier-3 Cities: Costs are lower outside big metros, but medical inflation is nationwide. Even in smaller cities, a sum insured of at least Rs 5–10 lakh is recommended. This might suffice for routine care locally, but you should plan on needing care in a major centre if a serious condition arises. In short, get whatever high cover you can afford – even if you live in a small town, policies suggest a Rs 10 lakh floor to guard against surprise major bills
Que: What are the financial ripple effects of a single hospitalisation without adequate insurance?
Susheel Agarwal: A single hospitalisation without insurance is a financial tsunami. The ripple effects are devastating and long-lasting, pushing families back by years.
1. Immediate Shock: The first casualty is your savings. People are forced to liquidate fixed deposits, mutual funds, and even sell family gold and property. This wipes out funds set aside for crucial life goals like children’s education or retirement.
2. The Debt Trap: When savings are exhausted, people turn to loans. Often, this means high-interest personal loans or, worse, borrowing from informal moneylenders. The burden of repaying this debt can cripple a family’s finances for a decade or more.
3. Compromised Future: The financial strain forces families to make terrible compromises. Children might be moved from private to public schools, long-term investments are halted, and retirement plans are indefinitely postponed.
4. Emotional & Health Toll: The immense financial stress takes a toll on the mental and physical health of the entire family, often leading to further health complications.
In short, it’s a vicious cycle that can trap a family in poverty for generations. Health insurance is the only vaccine against this financial catastrophe.
Que: What are the mistakes people make while buying health insurance?
Susheel Agarwal: The major mistakes when buying health insurance stem from prioritising low premiums or relying only on employer coverage. Here are some of the mistakes people make:
Focusing only on the lowest premium: Choosing the cheapest plan can be risky. Lower-cost policies often have hidden sub-limits (e.g. on room rent), high co-payments, or other restrictions. In other words, a bargain premium today can mean big out-of-pocket costs later when you claim.
Underestimating the required coverage: Picking a sum insured that’s too small (e.g., Rs 5–10 lakh) may leave you underinsured. Healthcare costs in India have risen sharply, so low coverage may not cover the cost of serious treatments. Experts recommend accounting for inflation and family medical needs when choosing your cover.
Hiding pre-existing illnesses: Concealing conditions like diabetes or hypertension to save on premiums is very dangerous. If you hide a pre-existing disease (PED), the insurer can deny or cancel your claim later. It’s much safer to disclose all health issues up front, since most plans will cover PEDs after the specified waiting period.
Ignoring the fine print: Many buyers skip reading the policy’s detailed terms and conditions. Overlooking key clauses – such as waiting periods, exclusions or coverage sub-limits – can lead to unpleasant surprises when you file a claim. Always read the policy document carefully before you buy.
Relying only on the employer’s cover: Assuming your company’s group insurance is enough can backfire. Group policies often exclude some family members, and they cease if you change jobs. It’s wise to have your own individual plan as a permanent safety net.
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