Property Insurance

 What Is Property Insurance?

Property insurance is a broad term for a series of policies that provide either property protection coverage or liability coverage for property owners. Property insurance provides financial reimbursement to the owner or renter of a structure and its contents in case there is damage or theft—and to a person other than the owner or renter if that person is injured on the property.

Property insurance can include a number of policies, such as homeowners insurance, renters insurance, flood insurance, and earthquake insurance. Personal property is usually covered by a homeowners or renters policy. The exception is personal property that is very high value and expensive—this is usually covered by purchasing an addition to the policy called a "rider." If there's a claim, the property insurance policy will either reimburse the policyholder for the actual value of the damage or the replacement cost to fix the problem.

KEY TAKEAWAYS

• Property insurance refers to a series of policies that offer either property protection or liability coverage.
• Property insurance can include homeowners insurance, renters insurance, flood insurance, and earthquake insurance, among other policies.
• The three types of property insurance coverage include replacement cost, actual cash value, and extended replacement costs.

How Property Insurance Works

Perils covered by property insurance typically include select weather-related afflictions, including damage caused by fire, smoke, wind, hail, the impact of snow and ice, lightning, and more. Property insurance also protects against vandalism and theft, covering the structure and its contents. Property insurance also provides liability coverage in case someone other than the property owner or renter is injured while on the property and decides to sue.

Property insurance policies normally exclude damage that results from a variety of events, including tsunamis, floods, drain and sewer backups, seeping groundwater, standing water, and a number of other sources of water. Mold is usually not covered, nor is the damage from an earthquake. In addition, most policies will not cover extreme circumstances, such as nuclear events, acts of war or terrorism.

 

Property insurance includes homeowners insurance, renters insurance, flood insurance, and earthquake insurance.

Understanding Property Insurance

There are three types of property insurance coverage: replacement cost, actual cash value, and extended replacement costs.

• Replacement cost covers the cost of repairing or replacing property at the same or equal value. The coverage is based on replacement cost values rather than the cash value of items.
• Actual cash value coverage pays the owner or renter the replacement cost minus depreciation. If the destroyed item is 10 years old, you get the value of a 10-year-old item, not a new one.
• Extended replacement costs will pay more than the coverage limit if the costs for construction have gone up; however, this usually won't exceed 25% of the limit. When you buy insurance, the limit is the maximum amount of benefit the insurance company will pay for a given situation or occurrence.

Special Considerations

Most homeowners purchase a hybrid policy that compensates for physical loss or damage caused by 16 perils, including fire, vandalism, and theft. The coverage, known as an HO3 policy, has certain conditions and exclusions. There is a predetermined limit on the coverage of certain valuables and collectibles, including gold, wedding rings and other jewelry, furs, cash, firearms, and other items. No coverage is usually provided in an HO3 for accidental breakage/damage and mysterious disappearance (lost, misplaced) of valuables, including fine art and antiques.

HO5 homeowners coverage includes everything in an HO3 policy, but is geared toward the structure itself and the property within the home, including furniture, appliances, clothing, and other personal items. An HO5 doesn't cover for earthquakes or floods. HO5 insurance policies are available to homes that were either built in the last 30 years or renovated in the last 40 years, and they typically cover any damages at replacement cost.

HO4 property insurance is usually known as renter's insurance—it covers tenants from loss of personal property and liability coverage. It does not cover the actual house or apartment being rented, which should be covered by the landlord’s insurance policy.

Note that none of these coverage levels reimburses the homeowner for property that breaks down or is damaged in more normal wear-and-tear situations, such as a roof that begins to leak without damage from wind and hail. That's where home warranties—another way to protect your property—can be helpful.

What does it cover?

This insurance concerns the property and the public liability. It covers the material losses resulting from damage.

It can be divided into categories according to the object of insurance and the type of risk. An example might be a marine or a fire insurance.

The subject of the property insurance can be both a natural and a legal person whereas its object are the property rights and the responsibilities of the insured person. The nature of damage covered by the insurance is always negative and the value of the damage is measurable in money. The sum insured is determined on the basis of the value of the object of insurance, while the benefit is paid in the form of compensation. The property policies consist of only short-term contracts, i.e. for up to one year.

Property insurance coverage

Property insurance coverage applies to:

• property —  including its loss or damage
• public liability — including third party property damage

In case of an event provided for in the contract, the insurance company is obliged to pay the compensation.

Types of property insurance.

Property insurance can be divided into two groups: individual and corporate insurance.

They provide the customers with:

• auto insurance,
• home insurance,
• travel insurance,
• marine, aviation and railway insurance,
• industrial insurance,
• agricultural insurance,
• public liability insurance,
• financial insurance.

Auto insurance is addressed to individuals and corporations and offers the following products:

• comprehensive car insurance,
• public liability insurance — civil liability of the owner or the driver of the vehicle for damages to life, health and property of third parties,
• assistance insurance — covering towing and the costs of totalling, returning from the place of accident, medical assistance, hospitalization and of the injured transport.

Home insurance, also homeowner’s insurance, covers damages such as: damage to the building, to the household property, windowpane breakage, burglary, theft, impossibility of living as a result of a fire or flood etc. as well as personal liability insurance (i.e. flooding neighbour's flat).

In turn, travel insurance offer is usually very wide. Its scope includes: loss or damage to luggage, consequence of the occurrence of accident, medical costs or third-party insurance.

Marine insurance covers: boat casco, cargo insurance — damages in purchased or delivered goods, freight insurance — cost of transporting the load, public liability insurance — shipowner's liability.

Aviation insurance is similar to the marine one and covers: carrier's passengers liability for damage on the ground as well as liability of aircraft manufacturers, airports and airport operators.

Railway insurance is offered to the carriers and infrastructure owners in the event of damage to the users’ property of their own property and personal damages.

Industrial insurance is partly similar to the home insurance (natural disasters, theft, public liability), but also includes protection against sabotage, industry-related risks or equipment failures.

Agricultural insurance covers damages being the result of forces of nature (drought, flood, hail), and losses in crops and livestock as well as obligatory public liability and buildings insurance.

Public liability insurance.

Public liability insurance is prepared for various professional groups, such as doctors, lawyers, investment advisors, entrepreneurs and natural persons.

The last mentioned group is the financial insurance protecting accounts receivables (bank credits, mercantile credits, leasing or instalments). Other insurance of this type may be: loss of regular income insurance, loss of earnings insurance, extra expense and contingency insurance or business interruption insurance.

The most frequently chosen insurance policies

The most frequently chosen insurance policies are: motor vehicle liability insurance (almost half of all contracts signed) and then other material damage insurances — insurances of weather and climate-related disaster risk, comprehensive car insurances and public liability insurance for agricultural contractors.

Property insurance provides a buffer against crisis situations. Their wide range allows the insured to protect himself against the consequences of the damages related to the vehicles, immovable properties, travels or natural persons. The conclusion of an insurance contract allows, to some extent, to compensate the material harm sustained.

 

Burglary Insurance Policy

The crime rate is increasing and getting your house or your office burgled leads to enormous loss. After the money that you spend in acquiring the assets for your home or your business, if the assets are stolen, you face a considerable financial loss. In fact, after a burglary, you might find it difficult to replace the items that you lost to theft. To cover the financial loss suffered due to burglary and theft, burglary insurance policies are available in the market. Let’s explore what a burglary insurance policy entails –

What is burglary insurance?

Burglary insurance is an insurance policy which covers the financial loss that you suffer in case of a burglary or attempted burglary into your home or business premises. Burglary is defined as an act of forceful entry into the house or business premises with an illegal intention of theft.

Features of burglary insurance

Burglary insurance policies have the following salient features –

·         They can be bought by homeowners, tenants as well as business organisations to cover the financial loss suffered due to burglary

·         A burglary insurance policy can also cover theft and robbery. That is why the plans are also called burglary and theft insurance plans

·         There are different types of burglary insurance plans available in the market

·         You can avail different types of burglary insurance policies for covering different types of assets which are exposed to the risk of theft

·         A standard burglary insurance policy can be extended to cover losses suffered due to burglaries committed during riots, strikes, fire, etc.

What is covered under burglary insurance?

Burglary insurance covers the following losses which you might face in case of a burglary or attempted burglary –

·         Damage to the home or business premises due to forceful and unlawful entry

·         Loss of assets or property due to theft and burglary

Coverage under burglary insurance policies can be taken for the following types of assets –

·         Cash and valuables

·         Home appliances

·         Electronic gadgets

·         Money in transit

·         Cash stored in safe

·         Stock in trade

·         Business assets

·         Plants and equipment used in the factory or business premises

·         Jewellery, etc.

What is not covered under burglary insurance?

Burglary insurance policies have the below-mentioned exclusions in which case the claims are not paid –

·         Loss or damage which occurs due to war, strikes, riots, etc. unless otherwise specified

·         Losses due to natural calamities

·         Losses suffered when the property is under renovation

·         Losses due to nuclear threats or contamination

·         Loss of property because it was confiscated by the Government

·         Consequential losses

·         If the family members are involved in the burglary, claims would not be covered

·         Precious metals and cash might be excluded unless specifically covered under the plan

·         Theft or burglary of share certificates, promissory bonds, treasury bills, etc. are not covered

·         Theft by employees or housemaids are not covered

·         Burglary or theft when the premises were left unattended or when the premise was not completely locked

·         Fraudulent claims are not covered

·         Theft using a duplicate key is not covered unless the key was acquired forcefully

·         Burglary, when proper security was not maintained, would not be covered

Types of burglary insurance policies

Burglary insurance policies can be of different types based on the type of coverage as well as the assets that they cover. Here are some of the commonly found burglary insurance policies in India –

1.    Stock Declaration Policy

This policy is for businesses which cannot estimate the exact value of their stock in trade. In such cases, the highest possible value of the stock is taken to be the sum insured so that the losses can be sufficiently covered.

2.    First Loss Policy

Under this policy, a portion of the stock is insured which is likely to be burgled. This type of policy is relevant when the total loss cannot be plausibly estimated.

3.    Full Value Policy

This policy covers the asset for its full value so that in case of loss the full value can be claimed.

4.    Money in Transit Insurance

This policy covers the risk of theft or burglary on an amount of money which is in transit. The policy is relevant for businesses where the movement of physical cash is involved.

5.    Business Premises Insurance

This policy covers the risk of burglary and theft in the place of business.

6.    Dwelling Insurance

Under this policy, your residential house is covered against burglary and theft.

7.    Jewellery and Valuable Policy

This policy specifically covers precious jewellery, valuable, works of art and other valuables against burglary.

8.    Cash in Safe Policy

This burglary insurance policy covers the risk of theft of the cash which is kept in a safe at the house or at the business premises.

Burglary v/s robbery v/s theft

While the terms ‘burglary’, ‘robbery’ and ‘theft’ are used interchangeably, their meanings are quite different from one another. Here’s how –

1.    Burglary is when there is an unlawful and forceful entry into your premises. You might or might not be present on the premises when the burglary occurs

2.    Robbery is an unlawful and forceful entry into your premises when you are present on the premises. Your presence is important for the act to be considered a robbery in the eyes of the law

3.    Theft involves non-violent and forceful entry into the premises

Some insurance policies can cover the only burglary while others can also cover theft and/or robbery. So, you should know how these terms differ from one another and check whether the policy allows coverage for all three terms or for some of them.

Premiums of burglary insurance policies

The premiums of burglary insurance plans depend on the asset covered, its value and the expected risks. You can, however, reduce the premiums through the following ways –

·         By installing safety devices in your house or business premises which would alert you to any unlawful activity

·         By installing CCTV cameras which would help in preventing or lowering the risk of burglary

·         By fencing the premises which are being insured

·         By installing security alarms which would lower the extent of loss, etc.

Things to remember when buying burglary insurance

You can buy a burglary insurance policy online by making an online application to the insurance company which is offering the cover. Before buying the policy, however, the following should be kept in mind –

1.    Ensure that all possible assets which face a risk of theft are covered under the burglary insurance policy

2.    Compare the available policies before buying

3.    Check whether the policy covers only burglary, theft or both

4.    The sum insured should be sufficient enough to cover the loss that you suffer. If the sum insured is inadequate, the claim would be settled on a proportionate basis even if the loss is covered under the sum insured. For instance, if the value of an asset is INR 1 lakh but you insure it for INR 80,000, if there is a loss of INR 50,000, the claim would be paid for INR 40,000

5.    The premium of burglary insurance policy can be reduced. Use the available ways to reduce the premium so that the policy becomes affordable

Making a claim under burglary insurance

If a burglary happens and you face a claim, here are the steps which you should take to raise the claim and get it settled –

1.    Inform the insurance company immediately of the burglary

2.    Take pictures of the loss which you have suffered. These pictures would serve as proof to help the insurance company estimate the extent of loss

3.    Record all the losses which you have suffered so that they can be mentioned on the claim form

4.    The receipts of repairs and replacement of the burgled items should be kept securely

5.    Record everything that happens after the burglary has occurred so that you give documentary evidence to the insurance company if required

A burglary insurance policy proves to be a valuable addition to your insurance portfolio as the policy compensates you for the financial loss that you suffer in case of burglaries. So, insure your home or your office under a burglary insurance policy and be financially secured against unlawful activities.

Frequently Asked Questions

1.    What is the meaning of policy extensions?

Policy extensions are additional coverage options which you can choose by paying an additional premium. These extensions increase the scope of coverage of the policy.

2.    Does burglary insurance offer any policy extensions?

Yes, burglary insurance plans offer policy extensions which allow you coverage against losses that you face due to riots, strikes, rebellion, etc.

3.    I was on holiday for 10 days and my house was burgled. Would the burglary insurance policy cover this loss?

No, burglaries occurring when the house is left unattended for more than 7 days are not covered.

 

COMPARE AND BUY BURGLARY INSURANCE POLICY

 

This policy is designed to cover business premises only like godown, factory, office etc.

Highlights of the Policy

There are three types of policies available.

·         Full Value Insurance: The policy must be affected for the full value of the property to be insured.

·         First Loss Insurance: In the event of improbability of total loss, proposer can opt for a percentage of total stocks to be insured

·         Stock Declaration Policies: These policies are given where large stocks frequently fluctuate in quantity during the year. The sum insured is fixed at the maximum value of stocks which the insured anticipates he will hold at any one time. A deposit premium of 100% of the annual premium will be paid at the beginning of the insurance. Monthly declarations of value are to be sent to the company and the “deposit” premium will be adjusted at the end of the policy period based upon the average of the monthly declarations

Scope

·         Loss or damage to the property insured by theft following upon actual, forcible and violent entry into the premises.

·         Damage to the premises following upon entry as above or any attempt thereat

The indemnity provided is to the extent of the intrinsic value of the property so lost or damaged, subject to the limit of the sum insured.

Exclusions

The company shall not be liable in respect of:

·         Gold, watches, jewellery, precious stones, plans, designs, money, business books etc. unless specifically insured.

·         Loss or damage where any insured or member of the insured’s household or of his business staff is concerned in the actual theft or damage.

The policy shall cease to attach:

·         If the premises are left uninhabited for 7 or more consecutive days and nights.

·         In the event of material alterations to the premises whereby the risk is increased.

·         If the insurable interests has passed from the insured otherwise by will or operation of law

 

The policy will not pay for the following losses or damage:

 

·         Loss of goods held in trust/ commission, jewelry, curios, title deeds, business books, unless specifically covered.

·         Burglary without any forcible entry.

·         Shop lifting, or acts where insured or his/her family members or employees are involved.

·         Losses recoverable under fire/ plate glass insurance policy.

·         War threats and nuclear perils.

·         Riot, strike, and malicious damage unless specifically covered.

·         Consequential loss or legal liability of any kind.

·         Premises left uninhabited for seven or more consecutive days, unless specifically agreed upon.

·         Uninformed material alteration in the premises.

 

 

Types of Coverage

​Comprehensive, basic/named perils, broad and "no frills" are typical home insurance policies. Wording and what's covered in individual policies vary from one insurer to another. Home insurance policies include personal liability coverage.

Comprehensive

As the most inclusive home insurance policy, comprehensive covers both the building and its contents for all risks, except for those specifically excluded. Two types of risk that are not normally included in any home insurance policy are:

• Uninsurable perils are predictable events that are not covered
• Optional coverage for which you can buy insurance, such as earthquake or sewer backup.

The insured perils included in comprehensive and other policies include coverage for aircraft or vehicle impact, fire, lightning, theft and window breakage.

If you live in a condo/strata or mobile home, you require customized insurance for your property type.

Basic or Named Perils

If you want to save money and carry the financial risk of some losses yourself, consider a basic or named perils policy. This policy covers only those perils that are specifically stated.

Broad

If a comprehensive policy costs more than you want to pay and a basic or named perils policy isn't suitable, a mid-priced compromise is the broad insurance policy. This policy provides comprehensive coverage on the big-ticket items, such as the building, as well as named perils coverage on the contents.

No Frills

Some insurers offer basic or no frills coverage for properties that don't meet normal insurance standards. If there are physical problems with your home that keep it from meeting the standards set by insurers, you may save money in the long run by correcting these problems to qualify for better coverage.

Personal Liability

Whether you own or rent your home, you can be held liable for bodily injury or property damage unintentionally caused to others. Your home insurance's personal liability portion provides coverage if such an event occurs on your property or anywhere in the world.

For example, if a visitor slips on a snow-covered walkway on your property and is injured, you may be held legally responsible. If you're found negligent, your personal liability coverage would cover the damages resulting from the injury up to the coverage limit. Liability coverage does not apply to injuries sustained by you or members of your household.

In addition to the home coverage types described above, insurers may use trademarked product names to describe home insurance packages.