Property insurance

Property insurance provides protection against certain risks to property. The risks include fire, theft, and some weather damage. This type of insurance is a vast branch of general insurance and the type of cover individuals require depends on the type of properties the individuals are seeking to cover.

There are package policies available which give a combination of covers. For instance, there are covers such as householders policy and office package policy  that, under one policy, seek to cover a variety of assets including buildings, contents etc. such policies may also include certain personal liability covers.

Property insurance includes specialized forms of insurance such as home insurance, fire insurance, flood insurance, earthquake insurance among others. The most popular property insurance is the standard fire insurance policy. This insurance policy offers protection against any unforeseen destruction of property due to fire or other perils covered under the policy. The various types of property that most policies cover include dwellings, shops, offices etc. though this type of policy is called fire insurance, it also covers lightning, riots and strikes, explosions among others. However, it’s good to note that there are some exceptions this policy doesn’t cover. Loss caused by war, pollution or contamination are excluded.

Another branch under property insurance is burglary insurance which covers property contained in the insured premises.burglary insurance however doesn’t cover damage to goods unless specifically covered in the insurance policy. All risks insurance basically offers cover for jewelry and portable equipment. Note that this cover is offered separately and selectively. Marine cargo insurance covers transits by water, air, road or rail and courier services. Banks, contactors, import/export merchants usually have this type of cover.

There are some common requirements that need to verified before parties purchase this cover. The proposer of the policy should have an interest in the assets being proposed for insurance. The proposer should then disclose all the necessary details which are relevant to the insurance company.

The sum insured is fixed under two methods. One is market value(MV) and the other is reinstatement value (RIV). In the case of market value in the event of a loss,depreciation is levied on the asset depending on itsage. Under this method, the insured is not paidamount sufficient to buy the replacement.In the reinstatement value method, the insurance company will pay thecost of replacement subject to ceiling of S.I. Underthis method, no depreciation is levied. Onecondition is that the damaged asset should berepaired / replaced in order to get the claim. It maybe noted that RIV method is allowed only forfixed assets and not for other assets like stocksand stocks in process.

The cost of insuring property usually depend on the perils to be covered, the value of the items covered, the usage of the premises proposed for insurance among others. It is highly recommended that potential proposers to insurance covers should know the specific perils that need to be insured to suit their wants.

6 thoughts on “Property insurance

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