Property Insurance

A property insurance is an umbrella term which comprises of various insurance policies like office insurance, construction all risk policy, engineering all risk policy, factory & warehouse insurance, motor fleet insurance and art insurance, etc.

Though, the purpose of a property insurance is to offer complete coverage against various natural and man-made perils like lightning, cyclone, storm, fire, bush fire, riots, aircraft damage, earthquake, etc. While, it is necessary to understand what is included in a property insurance policy, it is equally necessary to understand what is not. So, here is the list of exclusions in a property insurance policy which you should considered.

A property insurance would not offer coverage if loss or damage happens due to any of the below reasons=

  1. Willful destruction of your property
  2. Losses or damages caused due to wear and tear, war, invasion, etc.
  3. Antiques, cash, painting, work of art
  4. Losses which happen due to electrical fluctuations
  5. Seepage
  6. Mechanical/Electrical breakdown
  7. Damages arise due to defective construction
  8. Loss or damage which arises due to nuclear activity
  9. Loss or damage which happens to the stock in cold storage due to change in temperature
  10. Pollution
  11. Loss or damage of property/office equipment which arises when you are engaged in unlawful activities
  12. Landslide/earthquake

Along with the above, it is essential to inform your property insurance company about any new building work which you are likely to initiate at your site. For instance, if you modify your current office structure by adding more glasses and creating cubicles, it is necessary to inform your property insurance company about this. In case, you fail to inform the insurer and the new structure collapses, the property insurance company will not cover the losses or damages to the new structure as it did not form a part of the building when you first put it into use. Along with this, in most of the cases, property insurance companies exclude gates and fences from storm damages, as they are more vulnerable to losses or damages even if the storm which hits it is not severe.

Moreover, just because you have a property insurance policy, it doesn’t mean, you can act negligently. The insurer expects you to act carefully even if you have a property insurance policy. If the insurance company finds out that you have acted carelessly and due to which loss arises, the insurer can reject your policy application. Similarly, even after the loss, you have acted in a manner which further aggravates the loss, the property insurance company can refuse to settle your claim.

When you take out a property insurance policy, insurers would ask you to give the complete detail about the fire safety equipments which you have installed on your property. In case you give wrong details or perhaps describe equipments which are more advanced than what you have actually installed, your future claims for theft could be cancelled.

Case

A few years ago, Raj Singh opened his first office in Pune. It was the software office, where nearly 100 employees were working. Raj also bought office insurance policy to get complete coverage in case any losses or damages happen. Last year, the fire erupted at the office due to short-circuit and engulfed assets worth Rs 20 lakh.

As Raj had office insurance policy, it approached the insurer for the claim settlement. Here, the insurer appointed a surveyor who inspected the site to find out the real reason behind the loss. It was found out that the fire happened due to electrical fluctuations from the air-conditioning system. Further investigation revealed that there were some mechanical issues with the air-conditioning system and even when it was brought to the company’s notice, no appropriate action was taken and due to which fire occurred.

Read more: What is Contract Price Insurance Clause in Property Insurance?

Here, the office insurance company refused to settle the claim of Raj as the loss happened due to electrical fluctuations. Also, Raj acted negligently just because he had office insurance. He did not take any action to repair the air-conditioning system even when he knew about the issue. In this case, the property insurance company refused to settle the claim.