The Insurance applies only to those huts used for dwellings and constructed in rural areas with financial assistance from banking/cooperative/Government institutions. It can also apply to a selected area or cluster of huts. The scope of cover is against loss or damage due to Fire, lightning, explosion for boiler or gas used for domestics purposes only, earthquake, flood, inundation, storm, tempest, cyclone and other allied perils, riot and strike damage, malicious damage, aircraft and impact damage.

The scheme provides for relief to very poor families in rural areas in the event their huts (and belongings in the huts) are destroyed by Fire. The scheme is intended to benefit only landless laborers, marginal and small farmers, traditional craftsmen and others engaged in petty production or trade or transport or in domestic and other service whose annual family income from all sources does no exceed Rs. 4,800/-. The payment to be made will be Rs. 1000/- for hut and Rs. 500 for belongings in the hut destroyed by Fire. This is a Social Security Scheme launched by the Govt. of India. The entire premium is being borne by the Govt. of India.

The scheme is applicable to all States in India. Huts of all area/districts of the state should be covered However, State Govt. will have an option to cover any identifiable smaller group of Hut owners like IRDP beneficiaries, Green Card holders, SCs, STs, FFDA,Tribal. The Scope of cover is against Fire and allied perils, Act of God perils, riot strike, malicious damage, terrorism, etc.