• Property insurance is, unfortunately, a frequently neglected element for protecting your investment. The primary function of property insurance is to provide protection against unintentional or natural damages and other losses to your property. It may also encompass coverage for any liability or incidents that could occur to others while on your property. Let us explore some significant ‘Dos’ and ‘Don’ts’ while obtaining property insurance.

Do’s of Property Insurance

• Property insurance is quite a varied category, the classification of which is determined by the type of coverage being sought and the type of property being insured. Nonetheless, there are some common good practices that should be adhered to, regardless of the type, such as:

Choose the Right Policy

• This is a crucial initial step which necessitates a thorough evaluation of the purpose of the insurance and potential risks that require protection. Weather patterns and geographical location can significantly influence this process. By the conclusion of this step, you should have determined if you require insurance for structural damages, loss of goods and materials, or both. Depending on the nature of the property and the type of coverage, you can either select specific policies like Flood Insurance or Fire Insurance, or acquire a comprehensive package that covers most aspects already. It is also essential to comprehend the riders, inclusions, and exclusions to avert any unexpected issues when filing a claim.

Understand the Basis of Fixing Sum Insured

• The Sum Insured can be established using various methods for different types of coverage. For property damage, this is typically based on reinstatement value. This differs significantly from the market value of the property. It represents the cost of replacing the property with a new or rebuilt equivalent without accounting for any depreciation. Conversely, for coverage on possessions and goods, the applicable market value is utilized. Some providers may apply market value while factoring in a certain level of depreciation.

• There are additional methods as well, for determining the sum insured for machinery, factories, etc. Since your final claim is reliant on them, it is vital to have a clear understanding of the basis being utilized by your insurance provider.

Keep Ownership/Rental Documents Handy

• Exercise caution when entering the information details. Minor errors are known to result in claim denials and related complications, so ensure the accuracy of the information. The ownership documents or rental agreement of the insured property should always be readily available, as they serve as crucial documentary evidence when applying for the insurance and subsequently for raising claims.

Don’ts for Property Insurance

• Below are some actions that you should intentionally avoid while enrolling for property insurance.

Don’t Pick Additional Cover Randomly

• Most all-encompassing policies take into account various common and probable risks while offering coverage. There may also be additional options and enhancements available. It is crucial not to become overly enthusiastic and to reflect on the intended purpose of purchasing the insurance. Don’t overlook that less necessary supplemental coverage is certain to increase the total premium as well.

Don’t provide misleading information.

• Claims underwriting, disbursement, and auditing are very stringent processes with numerous regulatory and legal implications involved. Intentionally or unintentionally providing inaccurate information about yourself or your property may secure you the coverage you need at first; however, it can lead to serious consequences later, including legal action for fraudulent behavior.

Don’t assume everything is covered.

• Carefully read the policy documents to fully grasp the inclusions and exclusions. If necessary, you may choose to obtain add-ons or a separate specific policy for risks that are significant to you but not included in the original policy. Additionally, be mindful of any payout limits or percentages, if relevant.

Conclusion

• When purchasing property insurance, it is essential to evaluate potential risks and select the appropriate coverage for your property. Comprehensive policies are often recommended due to the range of possible losses they address; nevertheless, it is critical to read the documents thoroughly and comprehend all terms and conditions involved.

Disclaimer:

• The above information is for illustrative purposes only. For further details, please consult policy wording and prospectus before finalizing the sale.