Property insurance
Encyclopedia
Property insurance provides protection against most risks to property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

, such as fire, theft and some weather damage. This includes specialized forms of insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 such as fire insurance, flood insurance
Flood insurance
Flood insurance denotes the specific insurance coverage against property loss from flooding. To determine risk factors for specific properties, insurers will often refer to topographical maps that denote lowlands, floodplains and floodways that are susceptible to flooding.-Hidden floods:Nationwide,...

, earthquake insurance
Earthquake insurance
Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property...

, home insurance
Home insurance
Home insurance, also commonly called hazard insurance or homeowner's insurance , is the type of property insurance that covers private homes...

 or boiler insurance
Boiler insurance
Boiler insurance is a type of insurance that covers repairs and in some cases the replacement of a home boiler. It can also cover other parts of the central heating system and even plumbing and electrics.-Types of boiler cover:...

. Property is insured
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 in two main ways—open perils and named perils. Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism and war. Named perils require the actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage-causing events as fire, lightning, explosion and theft.

Types of Coverage

There are three types of insurance coverage. Replacement cost coverage pays the cost of replacing your property regardless of depreciation or appreciation. Premiums for this type of coverage are based on replacement cost values, and not based on actual cash value. Actual cash value
Actual cash value
In the property and casualty insurance industry, Actual Cash Value is a method of valuing insured property.Actual Cash Value is computed by subtracting depreciation from the replacement cost. The depreciation is usually calculated by establishing a useful life of the item and determining what...

 coverage provides for replacement cost minus depreciation. Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 25% of the limit. When you obtain an insurance policy, the coverage limit established is the maximum amount the insurance company will pay out in case of loss of property. This amount will need to fluctuate if homes in your neighborhood are rising; the amount needs to be in step with the actual value of your home. In case of a fire, household content replacement is tabulated as a percentage of the value of the home. In case of high value items, the insurance company may ask to specifically cover these items separate from the other household contents. One last coverage option is to have alternative living arrangements included in a policy. If a fire leaves your home uninhabitable, the policy can help pay for a hotel or other living arrangements.

World Trade Center case

Following the terrorist attacks of 11 September 2001, a jury deliberated insurance payouts for the destruction of the World Trade Center
World Trade Center
The original World Trade Center was a complex with seven buildings featuring landmark twin towers in Lower Manhattan, New York City, United States. The complex opened on April 4, 1973, and was destroyed in 2001 during the September 11 attacks. The site is currently being rebuilt with five new...

. Leaseholder Larry A. Silverstein sought more than $7 billion dollars in insurance money; he argued two attacks had occurred at the WTC. Its insurers—including Chubb Corp. and Swiss Reinsurance Co.—claimed the “coordinated” attack counted as a single event. In December 2004, the federal jury
Federal jury
A federal jury, in the United States, is impaneled to try federal civil cases and to indict and try those accused by United States Attorneys of federal crimes. A federal grand jury consists of 16 to 23 members and requires the concurrence of 12 in order to indict. A federal petit jury consists of...

 decided in Silverstein’s favor.

In May 2007, New York Gov. Eliot Spitzer
Eliot Spitzer
Eliot Laurence Spitzer is an American lawyer, former Democratic Party politician, and political commentator. He was the co-host of In the Arena, a talk-show and punditry forum broadcast on CNN until CNN cancelled his show in July of 2011...

 announced more than $4.5 billion would be made available to rebuild the 16 acres (64,749.8 m²) WTC complex as part of a major insurance claims settlement.

Post-Hurricane Katrina property insurance claims

In the wake of Hurricane Katrina, several thousand homeowners filed lawsuits against their insurance companies accusing their insurers of bad faith and failing to properly and promptly adjust their claims. Insurance companies changed their pricing policies after Katrina, with most policyholders in New Orleans seeing their property insurance premiums double after the storm, and deductibles increase by two, or even three, fold. The losses from Katrina severely impacted both the affordability and coverage amounts provided by property insurance, even in regions that were not impacted by the hurricane.

Florida Consumer Choice Act

On June 24, 2009, Fla. Gov. Charlie Crist
Charlie Crist
Charles Joseph "Charlie" Crist, Jr. is an American politician who was the 44th Governor of Florida. Prior to his election as governor, Crist previously served as Florida State Senator, Education Commissioner, and Attorney General...

 vetoed the Consumer Choice Act (H.B. 1171). The bill
Bill (proposed law)
A bill is a proposed law under consideration by a legislature. A bill does not become law until it is passed by the legislature and, in most cases, approved by the executive. Once a bill has been enacted into law, it is called an act or a statute....

 would have trumped state regulation, and allowed Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...

's biggest insurance companies to establish their own rates. State Farm
State farm
State farm can refer to:*Sovkhoz, a type of state-owned farm in the Soviet Union*Volkseigenes Gut, a type of state-owned farm in East Germany*Państwowe Gospodarstwo Rolne, a type of state-owned farm in People's Republic of Poland...

 Florida expressed its disappointment with Crist's veto
Veto
A veto, Latin for "I forbid", is the power of an officer of the state to unilaterally stop an official action, especially enactment of a piece of legislation...

 of the bill the company said "would have given consumers more options in their choice of a property insurer. It would have attracted more capital to the property insurance market in Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...

." State Farm
State farm
State farm can refer to:*Sovkhoz, a type of state-owned farm in the Soviet Union*Volkseigenes Gut, a type of state-owned farm in East Germany*Państwowe Gospodarstwo Rolne, a type of state-owned farm in People's Republic of Poland...

 had proposed a 47.1% property insurance rate increase for Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...

 policyholders. As a result of Crist's move, State Farm
State farm
State farm can refer to:*Sovkhoz, a type of state-owned farm in the Soviet Union*Volkseigenes Gut, a type of state-owned farm in East Germany*Państwowe Gospodarstwo Rolne, a type of state-owned farm in People's Republic of Poland...

 plans to drop coverage for more than 700,000 homeowners by 2011.

Ted Corless, who has represented large insurance carriers like Nationwide
Nationwide Mutual Insurance Company
Nationwide Mutual Insurance Company & Affiliated Companies is a group of large U.S. insurance and financial services companies based in Columbus...

, remarked on State Farm
State farm
State farm can refer to:*Sovkhoz, a type of state-owned farm in the Soviet Union*Volkseigenes Gut, a type of state-owned farm in East Germany*Państwowe Gospodarstwo Rolne, a type of state-owned farm in People's Republic of Poland...

's pullout from Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...

 to an Orlando
Orlando, Florida
Orlando is a city in the central region of the U.S. state of Florida. It is the county seat of Orange County, and the center of the Greater Orlando metropolitan area. According to the 2010 US Census, the city had a population of 238,300, making Orlando the 79th largest city in the United States...

 television news station:

"I think that homeowners are really going to have to look out for themselves," Corless said.

Five days following Crist's veto
Veto
A veto, Latin for "I forbid", is the power of an officer of the state to unilaterally stop an official action, especially enactment of a piece of legislation...

 of the Consumer Choice Act, Corless defended property insurance deregulation
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...

 on WFLA
WFLA (AM)
WFLA is an AM radio station in Tampa, Florida, serving the Arbitron Tampa-St. Petersburg-Clearwater market with additional listenership to the east in the adjacent Lakeland-Winter Haven market and to the south in the adjacent Sarasota-Bradenton market...

's AM Tampa Bay, when he pointed out, "If the blue-chip insurance companies wanted to price themselves out of the market, then they'll go out of business."

“The governor says he’s protecting the consumers’ choice but, in reality, he’s making it for them,” Corless added. “In a free market, all companies would be available to property owners and if a homeowner doesn’t like the price, he or she moves on. This veto limits those options and ties the hands of the blue-chip companies.

In 2006, the average Florida annual insurance premium was $1,386 for a home owner, one of the highest in the country.

Fire insurance in India

Fire insurance business in India is governed by the All India Fire Tariff that lays down the terms of coverage, the premium rates and the conditions of the Fire Policy. The fire insurance policy has been renamed as Standard Fire and Special Perils Policy. The risks covered are as follows:
  • Dwellings, Offices, Shops, Hospitals (Located outside the compounds of industrial/manufacturing risks)
  • Industrial / Manufacturing Risks
  • Utilities located outside industrial/manufacturing risks
  • Machinery and Accessories
  • Storage Risks outside the compound of industrial risks
  • Tank farms / Gas holders located outside the compound of industrial risks

Perils Covered

The following causes of Loss are covered:

  • Fire
  • Lightning
  • Explosion/Implosion
  • Aircraft damage
  • Riot, Strike
  • Terrorism

  • Storm, Flood, inundation
  • Impact damage
  • Malicious damage
  • Subsidence, landslide
  • Bursting or overflowing of tanks
  • Missile Testing Operations
  • Bush fire etc.


Exclusions

The following are excluded from insurance coverage:
  • Loss or damage caused by war, civil war and kindered perils
  • Loss or damage caused by nuclear activity
  • Loss or damage to the stocks in cold storage caused by change in temperature
  • Loss or damage due to over-running of electric and/ or electronic machines


Claims
In the event of a fire loss covered under the fire insurance policy, the Insured shall immediately give notice thereof to the insurance company. Within 15 days of the occurrence of such loss the Insured should submit a claim in writing giving the details of damages and their estimated values. Details of other insurances on the same property should also be declared.

See also

  • Insurable interest
    Insurable interest
    Insurable interest exists when an insured person derives a financial or other kind of benefit from the continuous existence of the insured object...

  • Builder's risk insurance
    Builder's risk insurance
    Builder's risk insurance is a special type of property insurance which indemnifies against damage to buildings while they are under construction...

  • Vehicle insurance
    Vehicle insurance
    Vehicle insurance is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise therefrom...

  • Hamburger Feuerkasse
    Hamburger Feuerkasse
    Hamburger Feuerkasse is the first officially established fire insurance company in the world,Anzovin, p. 121 The first fire insurance company was the Hamburger Feuerkasse Hamburger Feuerkasse ("Hamburg Fire Office") is the first officially established fire insurance company in the world,Anzovin,...


External links

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