Four important aspects of property insurance

The loss of property due to fire is more common than you think. It is must to have a fire…

Four important aspects of property insurance
Four important aspects of property insurance

The loss of property due to fire is more common than you think.

It is must to have a fire policy to cover your precious home, office and shop or godown. Talking about the real estate assets that usually runs in lakhs and crores, and where the reconstruction of property is not only painful but also highly expensive

The iconic Norte Dame Cathedral was recently destroyed by a dramatic fire in Paris. The Notre Dame is one of the most recognizable monuments in the French capital. This place is thronged by tourists, its pride of the locals and immense pain, effort and money have been spent on preserving it, conserving the beauty of the gargoyles carved on the outside and the typical gothic architecture. When everyone watched the cathedral burning in these flames, I remembered, an insurance broker had said once, “The loss of property due to fire is more common than you think.”

In all those modern societies that we live in, we see these fire instances happening in a repetition. These electric fire gut down a whole apartment. Some places they don’t cause much damage but are very difficult to control as fire spreads so easily due to the household goods and pieces of furniture that the damage happens in minutes. It merely takes a minute to lose an expensive house, decorated office or a shop filled with goods.

In older buildings, timber was much more prevalent as a building material. And timber catches fire easily too. These buildings still exist in our cities in the older parts. It is applicable to houses, shops and offices. South Mumbai, Old Delhi, older parts of Ahmedabad, Pune and all South Indian cities come immediately to mind. These buildings in these parts are at least 50 years old, this might be the reason of fire incidents happening in these area more often.

The materials are not the only reason responsible for the fire incidents taking place. It’s the irresponsibility and the negligibility pf people towards being conscious about the electrical parts. Electrical fire is equally capable of causing a loss of property due to failures. Many of the office and industrial estates have not got adequate protection. They don’t use a good quality wiring, fuses and modern circuit-breakers or these are not replaced for a long time.

A fire policy to cover your precious home, office and shop or godown is simply a must. I am amazed that people take the risk so casually. The real-estate assets usually run into lakhs and crores. A reconstruction of property is extremely expensive apart from being painful. If your property is not covered by insurance, please do it on priority.

The second aspect of property is flooding. Flash floods are increasingly common in our cities as climate changes cause heavy storms and cyclones. Our cities’ drainage system has not been upgraded to keep pace with population growth, density and the rise of suburban construction. The traditional drainage of rivers, canals, nullahsetc are choked and are not cleaned of silt and garbage. As a result, there have been dramatic pictures in the news of many Indian cities – Ahmedabad, Chennai, Delhi, Varanasi, Guwahati- having laid siege in the face of heavy rains or cyclones. There have been massive damages to properties in these cities. Godowns, shops and basements, ground floors are the most common victims. The eastern coast of the country is particularly susceptible to cyclones and flash storms – Andhra, Odisha and Tamil Nadu.

The third aspect is earthquake. Many people are not aware that the areas lying below the entire arc of the Himalayas is one of the most earthquake-prone regions in the world. This is because of geological reasons of tectonic plates under the earth’s surface constantly shifting and still moving. The arc of the Himalayas ranges in length equal to a distance between London to Istanbul from Jammu and Kashmir to Sikkim and Arunachal Pradesh. Uttarakhand, Delhi, Terai regions and the north-western parts of Uttar Pradesh are particularly vulnerable. Therefore, people living in these areas must ensure that their property insurance covers earthquake damage. Typically, the insurance policy does so.

The fourth aspect of property insurance one must take into account is content insurance. The property insurance aspects discussed in above paragraphs covered the damage to the property only. A claim on insurance will cover the reconstruction to the building only. However, a residence or a shop, especially godowns, may contain valuable contents – goods for trade, raw material, furniture and fixtures, equipment including computers, artefacts, white goods etc. a property Insurance gives the insured person an option to cover the contents of the property. One has to ask for this option as this is generally not a part of a basic insurance policy. It is wise to estimate the correct value of the contents and insure up to that amount only. Do not try to over-value the contents. Take a conservative and realistic market value.

Property Insurance is a crucial cover for all people who own valuable real estate. Ignore it at your own risk. It comes at a small price and provides real peace of mind when a rare calamity strikes.