The Importance Of Insurance:Benefits Of Insurance

Most people in Pakistan are averse to insuring their property due to the premium involved.
Despite their aversion there are 59 insurance companies operating only in Pakistan, of which 51 provide general insurance- insuring other then life- while the other sight deal specifically with life insurance.
In developed countries all properties and assets are insured for their actual value against any possible damages or loss due to unforeseen circumstances. In Pakistan, most property transactions are undervalued to save on tax, which when it comes to buying insurance means that the property cannot be insured for its actual market value.
For property insurance cover to be beneficial it is importance that the following points are kept in mind.

1) It is vital that the insurance policy cover the actual value of property rather then an understated value. For this to happen it is essential that all property documents contain the actual value of the property.
2) Understand clearly what the sum insured (the amount of money insured) means. Usually this sum covers the property's value at the time of insuring or the cost of replacing it if it is destroyed.
3) Make sure that the premium, which is based on the sum insured and the risk of damage occurring to the property, is paid on time (monthly/quarterly/yearly) so that the policy does not lapse. Most insurance companies will not entertain any claim if premium payments are not up to date.
The events of December 28, 2009 in Karachi are a stark reminder of what can happen and how easy it is to lose one's source of income as the traders and shopkeepers of Bolton Market, Paper Market, Kutchi Gali( Medicine Market) and Light House sadly did. According to the claims made by various traders associations, about 8,000 to 10,000 shop and warehouses were set ablaze and 30,000 to 32,000 people who lost their source of income. Goods worth billions of rupees ranging from plastic products to grocery products, toys, arms and ammunition, electric items, cloth and medicines were destroyed.
Unfortunately none of the shopkeepers in these markets were insured. This gives food for thought that majority of the people here in Pakistan, who shy away from the idea of insurance cover.