Property insurance

From ArticleWorld

Property insurance is insurance for providing financial protection against the loss of, or damage to, real and personal property within the area covered in the list of perils. It is sometimes used as a collective term for fire and business interruption insurance as well as burglary, fidelity guarantee and allied lines. Sometimes it may be called physical damage insurance in case of automobile insurance.

What it includes

Property insurance protects businesses and homes against physical damage to, or loss of, assets. Assets may be broadly defined to include the area in which the homes or the businesses operate and the property housed there. In the case of catastrophes like fire, explosion, theft, or vandalism, property insurance helps cover all costs - whether it is to repair damaged property or replace what is lost.

Thus, property insurance may include all different types of specific insurance schemes like fire insurance, flood insurance, earthquake insurance and home insurance.

How it works

There are basically two types of property insurance schemes available to consumers. One is the all-risk scheme which means that most common perils are included in the scheme without being specifically excluded. The other scheme is the named peril type which means that such common hazards like fire, theft, explosion and lightening are part of the covered peril. Some commonly excluded hazards are earth quakes and nuclear war. The consumers have the choice of opting for either taking into account which works better for them.