Property Insurance: Learn Its Meaning, Types and Benefits

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Property Insurance: Learn Its Meaning, Types and Benefits

Property insurance is a type of insurance that is purchased by property owners to protect their property in case of unforeseen circumstances. It can cover both the structure of the property and personal belongings inside, depending on the insurer you get it from. 

If you have recently purchased a new property or simply want to ensure your property is protected from potential risks, it is essential that you understand how property insurance works. This blog post will serve as a comprehensive guide to property insurance for you. 

What is Property Insurance?

Property Insurance is a legal contract between the insured and the insurance company. It provides financial protection to the insured individual’s property in the event of damage, theft or other covered risks. 

Some property insurance policies may also cover liability if someone is injured on the insurer’s property.

Why is Property Insurance Important?

Property insurance is extremely important since it provides essential protection against potential financial losses related to property damage. 

Just as water, electricity, and gas are considered utilities essential for basic living standards, property insurance can be regarded as a utility for protecting property against unforeseen events.

 

this image shows three types of property damage due to fire, water logging , and earthquake.

Property insurance ensures that you won’t face overwhelming financial burdens when there’s a crisis.

Types of Property Insurance in India

Property insurance isn’t a single type of insurance. It is a broad category that includes various types of policies designed to protect property owners against financial losses caused by damage, theft, etc. 

Let’s find out the most common types of property insurance in India. 

Property Mortgage

Insurance

Property mortgage insurance, or simply mortgage insurance, is a kind of property insurance policy that protects the lender if the borrower fails to pay their mortgage. 

It can also offer protection to the lender in case the borrower passes away or is unable to meet their mortgage obligations.

 

Property and Casualty Insurance

Property and Casualty Insurance protects the insured individual’s property as well as their belongings. It also covers the insured individual’s liability to others. 

Insurers providing property and casualty insurance cover a variety of things, including home insurance, marine insurance, professional liability insurance and auto insurance.

 

Renter’s Property Insurance

A renter’s insurance provides financial protection to policyholders if their personal belongings or movable assets are damaged in a rented property due to manmade or natural calamities. 

Some assets covered by the renter’s insurance are furniture, jewelry, expensive electronics, and other similar items.

Renter’s insurance can be purchased by business owners when they store their business products in a third-party storage facility.

 

Homeowner’s Property Insurance

Homeowner’s property insurance is a popular type of insurance in India. It is also known as home insurance. The homeowner’s property insurance provides you with money needed to fix any damage to your personal belongings caused by natural or manmade disasters such as fire, theft, earthquakes or burglaries.

Your property and the possessions you keep within it are both covered by your homeowner's insurance. Many reputable insurance providers will even pay for any losses you might incur if water tanks and pipelines burst or overflow.

 

Commercial Property Insurance

Commercial property insurance covers insurers against damages incurred to their property because of a natural or manmade calamity. 

However, this kind of insurance only covers the commercial properties used for business purposes. Residential properties are not covered by commercial property insurance.

 

Fire Property Insurance

One of the most common reasons why properties get damaged is the eruption of fire. Accidental fires can start for a number of reasons and cost the property owner a lot of money. Hence, fire property insurance is recommended for financial protection against damage to property due to fire.

Both domestic and commercial properties can purchase a fire insurance policy. It is important to know that damages caused by a fire that results from willful negligence will not be covered by a fire insurance policy.

 

How is Property Insurance Premium Calculated?

The following formula is used to calculate the property insurance premium: 

Premium = (Risk Factor * Sum Insured) / Coverage Period.

Property insurance premium formula can be explained as follows:

Risk Factor Sum Insured Coverage Period
Risk factor represents the risk level linked to the property. It is usually expressed as a percentage. Many factors are taken into account, such as property type, location, age, and past claims history.

Sum insured refers to the total coverage amount the property owner wants to receive in case of property damage.

 

 

Coverage period refers to the duration for which the insurance policy would remain valid.

 

 

 

List of Property Insurance Companies in India

Here is a list of companies that offer property insurance coverage in India:

Conclusion

Property Insurance is a type of insurance that provides financial protection against property damage. Since properties are expensive assets, it is a good idea to purchase property insurance to ensure financial protection in the event of theft, fire, or other covered incidents.

Want to become a property insurance broker in India? Connect with Registrationwala. Our experts will help you secure an Insurance Broker License from the Insurance Regulatory and Development Authority of India (IRDAI).

 

Frequently Asked Questions (FAQs)

Q1. What is property casualty insurance?

A. Property and Casualty Insurance is a type of insurance that protects the insured’s property and well as their belongings. Additionally, it covers the insured’s liability to others. 

Q2. What is property mortgage insurance?

A. Property mortgage insurance is a property insurance policy that protects the lender if the borrower does not pay the mortgage.

 

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