No man but feels more of a man in the world if he have a bit of ground that he can call his own. However small it is on the surface, it is four thousand miles deep; and that is a very handsome property.
~Charles Dudley Warner
Property is one of the most precious possessions anybody can have in today’s life. Unfortunately, just owning a property is not enough, you have to guard it as well against endless list of risks.
Property Insurance in India (or Home Insurance) offers shield against risks to property, such as fire, theft or some other threat. Property includes buildings, machinery, stocks, personal belongings etc. Property Insurance in India is an enormous category of General Insurance. The type of cover you need depends upon the type of property you are pursuing to cover.
You now know, what property insurance is for, let us have a look at the types of policies available under property insurance:
- Fire Policy
- Umbrella Policies
- Burglary Insurance
- Marine Cargo Insurance
- Engineering Insurance Policies
Fire Insurance Policy
The most popular Property Insurance in India is the Fire Insurance Policy. The fire insurance policy offers safeguard against any sudden loss or damage to the 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.
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.
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).
Umbrella insurance policies give an additional layer of security to the policyholder.
There are packages or umbrella covers available that give, under a single document, a combination of covers. For instance there are covers such as Building Insurance, Householders Policy, Shopkeepers Policy, Office Package policy etc. that, under single policy, aim to shield various physical belongings including buildings, contents etc. Such policies, apart from seeking to cover property may also include certain liability covers.
Burglary Insurance Policy provides financial compensation against loss or damage to property contained in the premises by acts of Burglary and/or Housebreaking.
This type of insurance policy may be offered for a business or for a house. The policy covers property contained in the premises including stocks/goods owned or held. It also covers cash, valuables, securities kept in a locked safe or cash box in locked steel cupboard if you precisely demand 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 under-insurance.
Generally, the Policy does 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.
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.
Import/Export merchants, Buying Agents, Contractors and Banks etc. can avail protection cover by buying this type of policy.
Marine Cargo Insurance 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.
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. Depending on your exposure towards risk, you can decide whether to take a Basic Cover or a wider cover.
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.
Engineering Insurance Policies
Some of the other property insurances available are Engineering Insurance Policies like the Electronic Equipment Insurance, Machinery Breakdown insurance etc.
Before buying 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 the policy inclusions and exclusions
How to Buy Property Insurance
You can buy Property Insurance in India policy either directly from the insurance company or through a registered intermediary.
In most insurance transactions, there is usually an intermediary – an insurance agent (individual or corporate) or an insurance broker.
An intermediary has a distinct role to play in the entire life cycle of a product, from the point of sale through policy servicing, up to claim servicing. An intermediary shall provide all material information with respect to a proposed cover to enable the prospect to decide on the best one. The intermediary is expected to advise the prospect with complete disclosures and transparency. After the sale is completed, the intermediary must coordinate effectively between the customer and the insurer for policy servicing as well as claim servicing.
Property Insurance: Some Dos and Don’ts
Here are some Dos and Don’ts for buying Property insurance.
When you buy a property insurance policy, you should:
- Know you can insure only property you own
- 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 assured. It can be
- Market Value of the property
- Reinstatement Value basis where the cost of replacement of the property is taken into account.
- 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
Companies offering property insurance policies in India
Many companies offer property insurance policies with various needs included under the policies. Here is an inclusive list of the insurance covers by some of the companies:
- Bajaj Allianz General Insurance Co. Ltd. – Householder Insurance
- TATA AIG General Insurance Co. Ltd. – Fire Cover, Privilege, Supreme Cover
- The New India Assurance Co. Ltd. – Householders Policy, Mobile Insurance
- Reliance General Insurance Co. Ltd. – Reliance Home Protect, Householders Package
- Royal Sundaram Alliance Insurance Co. Ltd. – Home Content Online, Home Shield Online
- ICICI Lombard General Insurance Co. Ltd.
- SBI Home Insurance
- HDFC Home Insurance
This insurance comes at a very cheap premium. Here is an illustrative quotation list for your reference.
About the Author:
Sapna Tiwari is a Certified Financial Planner and Masters in Financial Management with over half a decade’s experience in the field of personal finance. The views expressed are personal. She can be reached at email@example.com.