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Home Articles Part I: What Is Covered Under Property Insurance?

Part I: What Is Covered Under Property Insurance? Research Team | Posted On Wednesday, June 17,2009, 08:20 PM

Part I: What Is Covered Under Property Insurance?



Property Insurance

Insurance becomes a significant aspect of owning a property, it provides financial security; a financial backup to the investment. Property insurance provides protection against most risks to property, such as fire, theft and some weather damage; this includes specialized forms of insurance for example 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 Property Insurance

  • Fire Insurance
  • Auto insurance
  • Earthquake insurance
  • Home insurance
  • Boiler insurance
  • Title insurance
There are several Indian insurance companies offering insurance policies for property. To buy a policy one should consider the following:
  • Is the policy worth the property?
  • What are the clauses of the insurance, is it a safe deal?
  • What has been the history of the insurance company?
  • What are the formalities to be done to file a claim?
  • How long does it take to release the payment?
  • Will that be enough to compensate?
  • What is the schedule of the payment of the premium?
  • Is the premium amount affordable?
If these questions are answered adequately, then one can think of buying an insurance policy. However, the most significant factor that one should consider that one has to pay the premium on time and fully to avail all the benefits of the policy. There are various policies that need complete payment of a number of premiums before any claim can be filed while some other companies can avail a claim even on payment of lesser premiums.
See Also: Home Insurance Claim

Fire Insurance

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 (Located outside the compounds of industrial/manufacturing risks), etc.
Claims In the event of a fire loss covered under the fire insurance policy, the Insured shall directly give notice there of 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 compensation and their estimated values, details of other insurances on the same property should also be declared.
To calculate the amount of premium for an Indian fire insurance policy, the property is estimated to know its market value; there are a number of other factors that are taken into consideration, such as the type of policy the insured has opted for. Under this concept, the policyholder is expected to reveal the correct details while filing the claim. There should not be any misrepresentation of facts or figures, since wrong information will lead to the policy being declared as void. To get a fire insurance India cover, an individual also needs to fill up the following information in the policy form:

See Also: BBMP Property Tax

  • Name, occupation and address.
  • Subject matter description – which allows for identification in case of a fire.
  • Information about the area where the property is situated.
  • The purpose for which the property is being used.
  • Whether the property is already insured.
  • Personal insurance history.


Documents Required for Indian Fire Insurance

The documents that the policyholder is required to produce while claiming for the loss are as follows.
  • A true copy of the policy along with the schedule,
  • Past claims experience,
  • A claim form and
  • Photographs.
  • Report of the fire brigade 

Procedure of an Indian Fire Insurance Claim

  • The insured is expected to inform the insurance company at the earliest and within 24 hours.
  • The insurance company appoints a claim representative who surveys the fire damaged property. The insured wants to provide the claim representative all the relevant information.
  • The degree of actual loss is calculated by the claim representative.
  • The processing of the claim takes a maximum three weeks.

Fire Insurance Coverage

There are three types of insurance coverage; replacement cost pays the cost of replacing insured’s property regardless of depreciation or appreciation. Extended replacement cost will pay over the coverage limit if the costs for construction have increased, this usually will not exceed 20% of the limit. Actual Cash Value provides replacement minus depreciation. When insurers acquire an insurance policy, the coverage limit established is the maximum sum the insurance company will pay out in case of loss of property. This amount will need to vary if homes in your neighborhood are rising; the amount needs to be in step with the actual 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 particularly cover these items separate from the other household contents.
See Also: Frequently Asked Questions on Home Insurance

Auto Insurance

Auto insurance is insurance purchased for cars, trucks, and other vehicles, its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident. It is compulsory for all new vehicles, be it for commercial or personal use. Insurance Companies are coming out with comprehensive policies for its customers; they are also tying up with leading automobile manufacturers for a swift insurance process. An automobile may be insured against loss or damage by accident, fire, burglary, while in transit, third party accident etc, auto insurance companies come out with unique plans for four wheelers, two wheelers, and commercial vehicles.
Features of Auto Insurance
  • The primary use of auto insurance is to provide protection against losses incurred as a result of traffic accidents.
  • The auto insurance provides property, liability and medical coverage.
  • Property coverage pays for the damage to or theft of the vehicle.
  • Liability coverage pays for the legal liability to others for bodily injury or property damage.
  • Medical coverage reimburses the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

See Also: Types Of Auto Insurance

Auto Insurance Coverage Levels
The basic coverage of auto insurance is cited below:
  • The insured party
  • The insured vehicle
  • Third parties
Types of Auto Insurance Available 
  • Two Wheeler Insurance
  • Car Insurance
  • Commercial Vehicle Insurance
Calculation of Auto Insurance Amount/Premium:
Insurance companies are providing value added service to its client by offering them instant auto quotes, auto premium is determined by a number of factors like, make of the vehicle, year of manufacture, place of registration, current showroom price of the vehicle and model of the vehicle. It also depends whether the client is individual or corporate etc, the sum of premium raises with the increase in the price of the vehicle. Companies renew policies after expiry, a discount on premium is sometimes provided to existing clients.
Auto Insurance Claim Procedure:
  • Auto insurance claims can be accidental, theft claims or third party claims.
  • Insured should write the number of the other vehicle in case of an accident or third party claim
  • Names of witness should also be written down
  • File an FIR with the nearest police station
  • Insured should then contact the insurance company and get a claim number
  • A surveyor is appointed who reports the estimated value of loss or damage
  • Based on the report of the surveyor, insurance companies try to send the amount to the insured within one to three weeks
  • An individual might have to pay the repair charges himself and later get it reimbursed 
Documents Required for Auto Insurance Claim:
  • For Accident Claims
  • Claim form duly signed
  • RC copy of the vehicle
  • Driving license copy
  • FIR on a case-to-case basis
  • Original estimate
  • Original repair invoice, payment receipt from the service center
For Third Party Claims:
  • Claim form duly signed
  • RC copy of the vehicle
  • Driving license copy
  • Original policy copy
  • Original FIR copy
  • RTO transfer papers duly signed, mentioning that the vehicle cannot be located
In this article we have explained about two types of property Insurance such as Fire insurance and Auto Insurance. We believe that it will help you in making decisions about taking property insurance. In our Next article we will come up with more details about other types of property insurance like Home Insurance, Boiler Insurance Title Insurance, etc.

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