Property Insurance provides protection against most risks to property, such as fire, theft and damage by weather. Typical examples of these forms of insurance are fire & extraneous perils policies, burglary, equipment all risks and boiler insurance.
Named Perils vs. All Risks
Insurances of property are insured in two different ways – either under an All Risk policy or a Named Perils policy.
A named peril insurance policy covers only what is specifically noted in the policy. For example, if it doesn’t say you’re covered for vandalism damages or backed up sewers, you aren’t. Since the named peril insurance policy only covers specific perils, it is usually less expensive than an all-risk or open peril insurance policy. A typical broad form named peril policy would cover fire, windstorm, hail, aircraft, riot, vandalism, explosion and smoke. Flood insurance and earthquake insurance are two other common examples of named peril policies. When coverage is written on a named peril basis, the burden is on the insured to prove that one of the named perils caused the loss.
An all-risk or open peril policy covers everything except what is specifically excluded in the policy. The all-risk insurance policy is usually more expensive than the named peril policy because it is more comprehensive. Under an all-risk policy, the burden is on the insurance company to prove that the peril causing the damage is not excluded; otherwise, coverage applies. Since the exclusions and limitations are the key to determining what coverage is provided by an all-risk policy, a better name might be “named exclusions” coverage.
The Condition of Average (Average Clause)
Condition of average is the insurance term used when calculating settlement of a claim when the property insured at the time of the loss is of greater value than the Sum Insured.
In the event of a property insurance claim, the amount payable is limited to the sum insured noted on the policy. The Declared Value provided by the Policyholder is the figure used to determine the premium applied to the policy.
If, when taking out a policy, the Policyholder undervalues or underestimates the reinstatement value of the property, the property will be underinsured. A condition set by an insurer under the terms of the policy states that if the insurance value of a property at the time of loss or damage is less than its real value, payment by insurers will be reduced according to the difference and insurers will limit their liability by applying what is known as the Average Clause.
In effect, this means that the Policyholder is deemed to be the insurer for the amount of any under-insurance at the time of any loss, and even partial losses may be shared in proportion to the amount of under-insurance.
Valuation of Property & Assets
The sum insured is one of the most important parameters in property insurance. It is the limit of indemnity in the event of a claim and at the same time the basis for calculation of the premium. Insurance can provide full protection only when the sum insured is adequate at inception, during the period of policy and at renewals. Inadequate sum insured (underinsurance) could cause a settlement which would be less than the actual loss. Setting the sum insured too high could mean over payment of premium.
The assessment of property valuation requires the consideration of a number of factors:
- Construction Costs
- Demand and Supply of building materials, professional fees, building processes
- Installation & Commissioning Costs (Plant & Machinery)
- Extent of Improvements, Extensions
- When insuring property and assets, there are two options for calculating the sum insured:
- Market Value or Cost of Replacement minus depreciation
- In the event of a loss, depending on the age of the assets, depreciation is charged and reduced from the claim assessment.
- Reinstatement Value
In an event of a loss, the insurer will pay the cost of replacement subject to the fact that the sum insured mentioned under the policy is adequate for such replacement.
Large Commercial Property
Whatever type of property, we customise cost-effective insurance solutions for owners of large commercial properties within an extremely broad variety of industries. Because one size does not fit all our flexible and responsive property insurance policies are individually designed to meet each customer’s unique needs covering their buildings, business downtime (consequential loss) and personal property.
Utilising our flexible approach, we’ll work with you to design tailored insurance solutions that meet your every business need. With our partners, we can write the international and domestic property exposures. We are your source for traditionally structured policies as well as complex alternative market approaches including:
- Primary, Excess Liability or Umbrella Cover
- First Loss Limits
- Deductible buy backs
We will look at almost any type of property risk including:
- Industrial and manufacturing risks
- Builders’ risks
- Residential property
- Colleges & universities
- Public entities
Designed for small business and office risks, Business Packages are the ideal insurance solution combining different classes of insurance relevant to such businesses into one efficient and cost-effective policy. And these packages are flexible – you can select the type coverage suitable for your business as well as determine the sums insured.
Typically, a business package would include the following:
- All Risks on property like Office Contents, Stock, etc.
- Business Interruption
- Fidelity Guarantee
- Work Injury Compensation
- Public Liability
Whatever the risk we can provide and deliver tailored property solutions to a broad range of industries as well as providing expert advice along with a proven track record in placement and claims handling. Furthermore, we are committed to providing superior technical solutions and service by working closely with our customers to develop a detailed understanding of their business operations, risk exposures and risk appetite and to apply our expertise to those individual business situations.