What is Property Insurance & its importance?
Architecture Mar 19, 2020
What is Property Insurance & its importance?
The term insurance has stemmed from the words assurance and ensuring. In literal terms, insurance is an agreement between individual/business/property/belongings and a company or the state that provides a guarantee of compensation for specified loss, damage, illness, or death in return for the payment of a specified premium.
Today, insurance has become a huge part of everyone’s life. People insure the smallest of things to largest assets including phones, vehicles, life, gadgets and a lot more. And property insurance is a type of insurance that gives assurance of immovable assets. The importance of property insurance cannot be stressed on enough, as it is extremely important to keep the property safe and secure against mishaps. It is a safety measure to secure compensation in times of distress when specific kinds of damage happen to the property.
What is property insurance?
Property insurance is a kind of insurance that provides cover against damage of property. It covers the building structure and its content against perils such as fire, theft, natural disasters or manmade calamities. The coverage offered under these insurances is often not fixed and varies with the type of insurance taken and the needs of the consumer. A property can be insured mainly in two ways – hazards and liability.
Under hazard insurance, the policyholder gets compensation against damages that may occur due to fire, vandalism, theft and similar mishaps. This kind of insurance provides a cash value of the damages or the replacement value, as described in the policy. However, it takes into account the actual value of the item and its depreciation till the time of damage and pays accordingly.
Liability insurance covers compensation against the accidents that may take place on the property. Medical expenses that one might have to bear due to damage and injuries to life on the property will be covered; example, if someone accidentally falls or similar mishaps occur, liability insurance will take care of it.
What all is covered under property insurance?
Property insurance is documented in a written contract called a policy. This contract is the proof of the deal between policyholder & the company and binds them under the contract. The policyholder should pay a pre-decided amount known as premium. Premium is paid to the insurance company in exchange with the compensation that the company pays in case of certain damages that may occur to the property. The insurance policy covers the kinds of damages and losses in detail and hence should be read carefully by the policyholder. When it comes to property insurances, there are different kinds of insurances available such as office insurance, construction all risk, engineering all risk, factory and warehouse insurance, motor fleet insurance, art insurance, etc. This also includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, and boiler insurance.
Benefits of property insurance:
- Property insurance helps people to incur huge losses. It covers most of the damages and ensures that the policyholder doesn’t suffer on the loss.
- As part of different insurance schemes, policyholders often get benefitted in different ways. Under liability insurance, the policyholder gets the coverage for medical expenses for the injuries happened due to an accident or any other similar mishaps in the property.
- There are property insurance schemes for property owners who rent out the space. These schemes allow people to get the expenditure for repair damages made by the tenants.
- Insurance companies take care of damages and expenses that may occur on a home or commercial property due to vandalism, theft, fire accidents, etc.
- Some policies also allow people to cover their home contents like art, ornaments, furniture, etc. Insurance companies offer protection against damage or theft of these contents. However, the coverage will extend as per the terms of the policy.
Property is one of the most valuable assets to mankind. Protecting it under an insurance scheme provides security in distress times. There are many home insurance plans available in India that can meet the various needs of different people. If you are planning to buy a property or already own one, you should check out the insurance policies offered by different companies before making a deal.