The property insurance is the insurance that protects the physical goods and the equipment of the business or home against any loss from theft, fire, and any other perils. It can be an all-risk coverage policy that gives protection against all the risks, or it can be named-risk coverage policy that gives protection against only those perils that are specified in the policy document.
The property insurance is considered as an umbrella or package cover that offers a combination of covers through single policy. It may include the homeowner’s policy, renter’s policy, flood insurance, shopkeeper’s policy, office package policy, and earthquake insurance policy. Such policies instead of just covering the risk of the property might also include some of the personal liabilities also.
Generally, the property insurance covers the risks of all the damages caused by fire, theft, wind, smoke, snow, lightning, etc. But, the property insurance does not cover any damages that are caused by water due to flooding, water seepage, standing water, tsunamis, cyclones, etc. Some of the property insurance covers also exclude the losses due to earthquakes, molds, and the acts of war like terrorism, etc.
On the night of 24th December 2014, a sudden fire erupted in the home of Mr. and Mrs. Shah, and the whole house was filled with smoke. The fire spread so quickly that nothing could be done to limit the damages and the whole house burned down. The good thing is no one was hurt, and the only loss was the property. Thankfully, Mr. and Mrs. Shah had a home insurance policy.
They filed their claim with the insurance company and submitted all the necessary documentation. Since the house has been beyond repairable conditions and needed to be built again from scratch, they also got an estimated quote for rebuilding the house again.
The insurance company appointed a claim adjuster to review the claim which, after the site visits, collecting necessary evidence, and consulting the experts finalized the amount of a claim at Rs. 25,00,000 should be paid to the Shah’s. That is approximately 85% of the total rebuilding cost.
Had there been no insurance cover for the house, Mr. and Mrs. would have to incur the entire cost of rebuilding out of their own pockets.
