Basics of Property Insurance

Property Insurance

Property insurance is critical before purchasing any property. This is because when you purchase a property, you don’t buy it just for the sake of living, but also for finding a security of shelter and financial security through a massive investment. If you think about the security of the property in depth, you will realize as such there is no security for this security itself. What if your property gets damaged by fire? What if your property gets destroyed due to some terrorist activity? What if the property is attacked by robbers? In all such situations, your property’s security itself gets jeopardized. The only way to protect your property from such insecurity is to get a property insurance.

Often people do not understand the basics of insurance and which is why they do a lot of mistakes while taking an insurance policy for their property. The concept of insurance started long back at the European inns where traders used to assemble. Often these traders faced huge loss due to robbery on the way. So these traders who met at the inns kept some small amounts of deposits in a common fund and when someone got robbed they helped that person out of that common fund. Though modern day concept of property insurance is much more complex than its original concept, but the essence still remains the same. Nowadays, the common fund that is collected is not just kept as security deposit but is also invested in other areas, which helps in growth of this fund. Since, the modern concept of property insurance is much more complex, you need to know some basic facts before you deposit your money in such insurance funds.

Firstly, you need to know about the policy document. Policy is the contract that you enter into with the insurance company. They provide a document signed and stamped by them and get it counter-signed by you. This is going to be your policy document, a proof for your policy. This document contains all the information related to your insurance policy. Secondly, you need to know about the insurance coverage. This is the clause in your policy contract which gives details about the property insurance done by you viz. particulars of the property insured, amount of money receivable by you in the event of any damage or destruction to your property. Moreover, it also contains the clause where it is stated the amount of premium payable by you. Premium is the amount of deposit you regularly make in the common fund.

Another important factor that you should know before going for any property insurance is the exclusion clauses of the coverage. In certain situations, you do not get cover for any damage caused to your property like an acts of God i.e. destruction by flood, earthquake, etc. Even in case of damage due to negligence, intentional acts and many such other reasons you might end up not getting the coverage. So it is very important to read the between the lines of the entire policy terms and conditions, and then go ahead to sign on the policy document.

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by Balaji R via Shriram Properties