by Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, or boiler insurance. Property is insured in two main ways—open perils and named perils.
Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism, and war. Named perils require the actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage-causing events as fire, lightning, explosion, and theft.
Types of Coverage
There are three types of insurance coverage. Replacement cost coverage pays the cost of repairing or replacing your property with like kind & quality regardless of depreciation or appreciation. Premiums for this type of coverage are based on replacement cost values, and not based on actual cash value. [5] Actual cash value coverage provides for replacement cost minus depreciation. Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 25% of the limit. When you obtain an insurance policy, the limit is the maximum amount of benefit the insurance company will pay for a given situation or occurrence. Limits also include the ages below or above what an insurance company will not issue a new policy or continue a policy.
This amount will need to fluctuate if the cost to replace homes in your neighborhood is rising; the amount needs to be in step with the actual reconstruction value of your home. In case of a fire, household content replacement is tabulated as a percentage of the value of the home. In case of high-value items, the insurance company may ask to specifically cover these items separate from the other household contents. One last coverage option is to have alternative living arrangements included in a policy. If property damage caused by a covered loss prevents you from living in your home, policies can pay the expenses of alternate living arrangements (e.g., hotels and restaurant costs) for a specified period of time to compensate for the “loss of use” of your home until you can return. The additional living expenses limit can vary, but is typically set at up to 20% of the dwelling coverage limit. You need to talk with your insurance company for advice about appropriate coverage and determine what type of limit may be appropriate for you.
Fire insurance in India
Fire insurance business in India is governed by the All India Fire Tariff that lays down the terms of coverage, the premium rates and the conditions of the fire policy. The fire insurance policy has been renamed as “Standard Fire and Special Perils Policy”. The risks covered are as follows:
- Dwellings, offices, shops, hospitals:
- Industrial, manufacturing risks
- Utilities located outside industrial/manufacturing risks
- Machinery and accessories
- Storage risks outside the compound of industrial risks
- Tank farms/gas holders located outside the compound of industrial risks
Importance
Protection Against Property Damage. Property insurance offers coverage against a lot of natural disasters including, but not limited to, monsoons and floods, fires, earthquakes, theft, and other weather-related damages. Regardless of your home’s size, location, and other security features that you may have added, no property is invulnerable to fires, floods, or burglaries. In some cases, the land your property is built in can also erode and send your home crashing down. Being a huge structure, homes have a lot of vulnerabilities; cover it with an earthquake or hurricane property insurance.
Protection Against Liability. A less known benefit of property insurance policies is its liability coverage clause. Many other forms of insurance policies including auto insurance include this provision. Sure, being a careful homeowner can help prevent a lot of accidents and injuries, but an incident could include your neighbors or your neighbor’s home. Liability coverage from your property insurance can help protect against these potentially costly incidents.
Protection Against Power Outages. Power outages were more frequent in the past, but still occur from time to time. If you run your computer or other electronics on a power cord, these outages can cause serious damage to your devices and shorten their lifespan significantly due to surges, Power outage can also cause food to spoil, which is why a lot of property insurance from homeowners include a refrigerator-restocking provision that can pay out up to $500.
Protection For Your Art And Jewelry. For homeowners who have expensive jewelry, art pieces, or other valuable possessions in their home, ask your insurance provider about adding a floater to your property insurance. This add-on feature will pay out for any damages to your personal items. Keep in mind, though, that these add-ons only usually have a fixed amount that will be paid.
Protection For Commercial Ventures. If you decide to rent your property out to a third-party, whether as a dorm room for college students, for families with kids, or for singles with pets, you are held responsible for any structural damages or personal injuries that they cause during the occupancy. In the event that your tenant gets hurt and files a law suit, the insurance may also offer some protection. Moreover, if you are caught in a situation wherein you need to file a lawsuit against your tenants for not paying rent or causing damage to your property, property insurance can also pay out for that.
Final Thoughts. These are just some of the many things that a property insurance can protect you from. Note that not all insurance policies are cut from the same cloth. You’ll want to sit down and discuss with a trusted insurance provider about specific coverage features that work best for your property and personal circumstances. For instance, if you live in a neighborhood that has historically withstood power outages, then tailoring your insurance policy to cut that feature from your coverage makes practical sense.
Exclusions
The following are excluded from insurance coverage:
- Loss or damage caused by war, civil war, and kindred perils
- Loss or damage caused by nuclear activity
- Loss or damage to the stocks in cold storage caused by change in temperature
- Loss or damage due to over-running of electric and/or electronic machines
Claims In the event of a fire loss covered under the fire insurance policy, the insured shall immediately give notice thereof to the insurance company. Within 15 days of the occurrence of such loss the insured should submit a claim in writing giving the details of damages and their estimated values. Details of other insurances on the same property should also be declared.
