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General Advice for Property Insurance

When you decide to buy an insurance policy:
  • Check if the company selling the policy is registered with IRDA
  • Make sure you buy the policy through a genuine licensed agent or broker. Ask for an identity card or licence
  • You can also buy policies from the company directly
  • Read the policy brochure/ prospectus carefully and get to know what the policy covers and does not cover.
  • Why Buy Property Insurance ?
  • What Property Insurance to Buy ?
  • Property Insurance Dos and Don'ts

Insurance of property means insurance of buildings, machinery, stocks etc against Fire and Allied Perils, Burglary Risks and so on. Goods in transit via Sea, Air, Railways, Roads and Courier can be insured under Marine Cargo Insurance. Hulls of ship and boats can be insured under Marine Hull Insurance. Further, there are specialized policies available such as Aviation Insurance Policy for insurance of planes and helicopters. Thus Property Insurance is a very vast category of General Insurance and the type of cover that you need depends upon the type of property you are seeking to cover.

Why Buy Property Insurance

Package or Umbrella policies

There are package or umbrella covers available which give, under a single document, a combination of covers. For instance there are covers such as Householders Policy, Shopkeepers Policy, Office Package policy etc that, under one policy, seek to cover various physical assets including buildings, contents etc. Such policies, apart from seeking to cover property may also include certain personal lines or liability covers. Make sure you understand the complete details of cover and exclusions contained in the policy you are considering. Package or Umbrella covers could have common terms and conditions for all sections as also specific terms for specific sections of the policy.

Fire Insurance

The most popular property insurance is the standard fire insurance policy. The fire insurance policy offers protection against any unforeseen loss or damage to/destruction of property due to fire or other perils covered under the policy. The different types of property that could be covered under a fire insurance policy are dwellings, offices, shops, hospitals, places of worship etc and their contents; industrial/manufacturing risks and contents such as machinery, plants, equipment and accessories; goods including raw material, material in process, semi-finished goods, finished goods, packing materials etc in factories, godowns and in the open; utilities located outside industrial/manufacturing risks; storage risks outside the compound of industrial risks; tank farms/gas holders located outside the compound of industrial risks etc.

What a Fire Policy covers:

Thought it is called ‘Fire Insurance’, apart from the risk of fire, it also offers cover against lightning, explosion/implosion, aircraft damage, riot, strike and malicious damage, storm , cyclone, typhoon, hurricane, flood and inundation, impact damage, subsidence and landslide including rockslide, bursting and/or overflowing of water tanks, apparatus and pipes, missile testing operations, accidental leakage from automatic sprinkler installations, bush fire etc.

What a Fire Policy excludes:

A fire insurance policy usually does not cover a certain amount known as “excess” under the policy. Loss or damage caused by war and warlike operations, nuclear perils, pollution or contamination, electrical/mechanical breakdown, burglary and housebreaking are excluded. Certain perils like earthquake, spontaneous combustion etc can be covered on payment of additional premium. Fire insurance policies are issued for one year except for dwellings, where a policy may be issued for long term (with a minimum period of three years).

Burlary Insurance

A Burglary Insurance policy may be offered for a business enterprise or for a house. The policy covers property contained in the premises including stocks/goods owned or held in trust if specifically covered. It also covers cash, valuables, securities kept in a locked safe or cash box in locked steel cupboard if you specifically request for it.

Apart from offering cover for the contents in the premises, a Burglary Insurance policy covers damage to your house or premises caused by burglars during burglary or attempts at burglary. The Policy pays actual loss/damage to your insured property caused by burglary/house breaking subject to the limit of Sum Insured. If Sum Insured is not adequate, Policy pays only proportionate loss. Hence, you must ensure that you value the property covered correctly to ensure that there is no underinsurance.
A Burglary Insurance Policy can generally be extended to cover Riot, Strike, Malicious Damage and Theft.

What is not covered in a Burglary Insurance Policy?

Generally, the Policy will not pay for loss/damage to goods held in trust/commission unless specifically covered, jewellery, curios, title deeds, business books unless specifically insured; any amount that is recoverable under Fire/Plate glass insurance policy; loss from a safe using a key or duplicate key, unless it is obtained by violence or threat; Due to shop lifting, acts involving you/your family members/ your employees; due to War perils, Riot & Strike ( covered by payment of additional premium), Acts of God, Nuclear perils.

All Risks Insurance

All Risks Insurance generally offers cover for jewellery and/or portable equipment etc. This cover is generally offered selectively. The design of the policy may vary from company to company. It is important to note that an All Risks policy is not free from exclusions. So, the term “All Risks” doesn’t mean that anything and everything is covered.

What is generally excluded in All Risks Insurance?

Lookout for the exclusions—generally actions of moth, vermin, mildew, wear and tear or repairs, dyeing or bleaching or any gradually operating cause , Mere breaking/ scratching or cracking of fragile items unless caused by accident to the means of conveyance and Any mechanical or electrical breakdown/derangement except due to accidental external means, Over winding, denting or internal damage to watches or clocks, Thefts from cars except fully closed saloons Consequential losses, any legal liability, War perils, nuclear risks, any government/ local authority action and Any loss due to insured's action which has contributed to increase in risk are excluded from the scope of the policy.
On payment of additional premium mechanical and/ or electrical/ electronic breakdown extension may be offered.

Marine Cargo Insurance

Marine Cargo Insurance covers transits by Water, Air, Road or Rail, Registered Post Parcel, Courier or a combination of two or more of these.

Who can take a Marine Cargo Insurance Policy?

Buyers, Sellers, Import/Export merchants, Buying Agents, Contractors and Banks etc. Marine Cargo Policies cover the interest in the cargo and also extend to cover the interests of any third party who has acquired interest upon transfer of ownership, as determined by the Terms of Sale.

How Marine Cargo Insurance helps?

Cargo can be damaged on exposure to a wide variety of risks, including an accident of the vehicle carrying the cargo, damage due to jolts, jerks etc. Decide whether you want to take a Basic Cover or a wider cover. Read and understand the terms and conditions of the policy. Check whether there are any ‘Deductibles’.

What is generally excluded in a Marine Cargo Insurance Policy?

Loss or damage due to Inherent Vice , Delay, Insufficiency of packing, loss or damage due to financial default or insolvency of the ship owner etc.

What are the other types of property insurance available?

Some of the other property insurances available are engineering insurance policies like the Electronic Equipment Insurance, Machinery Breakdown insurance etc.

Dos and Don'ts for Property Insurance

A fire or burglary in your home is enough to devastate you. A fire insurance policy protects you from all this and more. Doing all the right things while buying your policy goes a long way in assuring your peace of mind and also giving you the right protection at the time of need.

Here are some Dos and Don’ts for buying Property insurance

dos

When you buy a property insurance policy you should:

Know you can insure only property you own.

Be sure you have the documents to prove ownership and value at the time of a claim.

Give a complete and correct description, address and location of the property to be covered.

Ask the intermediary or insurer to give information and explain the basis of fixing the Sum Insured. It can be

  • Market Value basis where depreciation is taken into account or
  • Reinstatement Value basis where the cost of replacement of the property is taken into account. This is the basis on which the claim is paid.
  • Information regarding add-ons; choose them as per your needs

don’ts

Don’t allow anyone else to fill your proposal form

Don’t conceal or misstate any facts about the property and its fixtures

Don’t misdeclare the value of your property and face disputes at the time of a claim