Published in Economic Times on 30 July, 2015, Written by Kapil Mehta
A shop owner faced huge loss of his raw material and premises when water leaked through the ceiling of the bathroom of his godown. In locating the source of the leakage, plumber ripped out the entire bathroom including tiles and the walls. There can be several such situations that cause losses to the machinery, property and goods. A property insurance customized to the needs of the business can mitigate such losses.
What is Property Insurance?
Property insurance protects buildings, machinery, stocks, and goods against a set of specified perils or risks. This includes fire, home, earthquake and machinery breakdown insurance. Property is insured in two ways: Open Perils and Named Perils. Named perils policy covers damages which are listed and named in the policy. In named perils, insured has to prove that damage is according to the peril listed in the policy. Open perils policy covers all the risks except the perils listed as exclusion . An Open perils policy is also referred as “All risk” policy.
What are the benefits of the scheme to the SME?
Taking property insurance can have many advantages. The insurance cover protects from a lot of segments- physical damages, terrorist attacks to natural calamities. Premium of these policies is low and affordable. Insured has the option to insure the entire property or contents only, or both. A company can choose the limits of sum insured for coverage offered depending on their insurance needs. An SME can get the policy customized as per their needs by taking add-on covers in the policy like loss of rent cover, keys and lock replacement cover, employee compensation cover, public liability cover.
What are the points to keep in mind in buying property insurance?
Before buying the insurance of your office premises or factory, evaluate the risk proneness of the area and the premises. Remember that premium would vary according to the extent and type of cover. Make sure you know about the claim process properly. The firm should always provide the genuine details in order to get best cover and hassle-free claims
Who can buy property insurance?
*Owner of Building and contents such as house hold articles, furniture etc. *Educational/ Research Institutions. *Hotels, Boarding and Lodgings, Hospitals, Clinics or such service providers. *Industrial and Manufacturing Firms. *Godown Keepers. *Bailees, Lessor, Lessee, Banks, Financial Institutions, Mortgagors, Mortgagees. *Traders in stocks. *Trustees, Charitable Institutions. *Transporters and C & F Agents.
How can SMEs buy property insurance?
An SME should actively seek information about cover benefits, exclusions, premium details under the policy from the insurance intermediary. Premium depends upon perils to be covered, value of items covered, usage of premises insured and location details of the property. A proposal form stating all required details is filled by the company. Make sure information is accurate, complete and signed by the authorized person in the company. Then the company should submit the necessary documents along with the form to the insurer. Finally payment should be done in order to commence the policy.
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