Sunday, December 18, 2011

What is Property Insurance: Limitations & Benefits of Property Insurance: Mortgage Property Insurance

Whether your property is residential or commercial it should be property mortgage insured to provide financial protection against damages. Insurance companies charge an annual premium after evaluating the building's value and risk exposure by conducting a pre-insurance survey.
There are two main types of mortgage property insurance available:
1.Buildings and fittings (including electrical, plumbing, glass and wooden fittings).
This usually covers the damages/losses to the property caused by:
  • Fires or explosions.
  • Natural disasters (earthquakes and atmospheric disturbances such as storms, flooding and lightning strikes, etc)
  • Plumbing or electrical problems (burst water pipes, short circuits, etc)
  • Property damage (due to malicious acts, riots, strikes, car/aircraft crashes etc) 
Limitations: Properties are not insurable against damages/losses due to illegal possession. Additionally, some insurance companies provide conditional or no coverage for buildings located in earthquake zones and/or storm-susceptible areas.
Annual Insurance Premium (fee charged by the company) is usually 0.18-1% of the building's estimated value.
2. Building and fittings plus contents: Along with the structure and fittings, this also covers specified contents within the building including crockery, cutlery, furniture and fixtures, as well as valuables such as jewelery, paintings, antiques, electronics and home/office appliance etc. The home/office owner is required to provide the insurance company with a list of all the building's contents and their estimated value, based on which the insurance company proposes a premium.
Limitations: Electronic items such as laptops, cell phones and gadgets etc. can be insured, but damage/loss occurring to them outside the premises is not covered. Jewelery and cash must be specifically declared along with their value. In some cases, instead of inuring of property mortgage insurance the full value of expensive jewelery, the insurance company may decide to insure only a percentage of the stated value.
Annual Insurance Premium is 1-2% of the total value of building fittings and contents.