Property is a valuable asset and should be taken care of as much as possible. It is highly recommended to insure your real estate as it requires a very large amount of money considering the purchase price. Property insurance, as the name implies, provides different types of protection for your property, including your home.
When buying a home through a mortgage (KPR), banks usually include real estate insurance directly in their installments. The property insurance is valid for as long as the installment payment is made. Therefore, anyone who decides to buy real estate, such as buying a home in cash or other second-hand property, should consider taking out property insurance for maximum protection.
Learn about property insurance
Property insurance has a slightly different definition than fire insurance. For some companies, property insurance is distinguished from fire insurance. Fire insurance is part of property insurance while you are at another company. But in essence, property insurance offers different types of protection for property.
These risks include fire, robbery, riots and riots, liability to third parties, architect / investigator and consultant costs, and the risk of damage from a vehicle crash.
Interestingly, non-life insurance products also have all the risk features already well known in auto insurance. So what is all risk property insurance? All-risk property insurance is all-risk insurance that provides coverage in the event of a property experiencing fire, lightning, explosion, plane crash and smoke, natural disasters, and theft and robbery.
Types of property insurance
As you know, for subsidized mortgages, the 5% interest rate paid by the debtor / customer includes life insurance, fire insurance and credit insurance. Therefore, the subsidized home is still insured and the homeowner does not have to pay any additional insurance costs.
On the other hand, if you are considering property insurance, please note that property insurance can be divided into two types. In other words, home insurance that reliably protects homes and business insurance that covers commercial real estate. Check out the more complete description below.
1. Home insurance
A home is not only a residence, but also a valuable asset worth investing in. So, of course, you are obliged to protect yourself with home insurance. Home insurance means transferring risks and financial losses to an insurance company. The economic loss in question is when a home experiences a disaster affected by a natural disaster or fire.
More interestingly, many home insurance policies today protect not only the physical condition of the home, but also the risk of accidents that can occur at home.
This advantage can also protect you from proceedings if someone is injured in an accident at your home.
2. Business insurance
Allianz explained that property insurance has an extension of protection called business continuity protection benefits or business interruptions. This benefit temporarily replaces operating income if the property in which you operate is exposed to risks such as fire or natural disasters.
Especially in the case of business-related property insurance, there are three aspects that business actors must raise to help insurers determine insurance prices for business interruptions.
Gross profit of the affected company. This gross profit is obtained by adding net profit to the company’s fixed costs.
Fixed costs such as employee salaries, loan interest, building rent, or company fixed costs.
Variable or non-fixed costs for electricity, water, gas, etc.
If the business actor can provide detailed data, the insurance company can calculate what the insurance price will be.
This includes considering adding additional features such as financial trends, recovery periods, and other factors that provide protection against business disruptions.
How to choose property insurance
One thing you need to understand is that the principle of insurance is to protect against losses that can be caused by something uncertain. In other words, if the insured is in a flooded area, it is certain that the property cannot be included in the flood insurance program. If the area is adjacent to a densely populated settlement, or if you do not have access to a fire engine, fire insurance will not be possible.
Broadly speaking, there are four types of protection offered by insurance companies:
- Protection of the structure of the house
- Protection of home property
- Protection responsibility
- Similar to additional living expenses when you cannot stay home in the event of a disaster
For this reason, you should basically be careful when choosing property insurance. The main thing is to make sure that the insurance product you choose contains all the protection you need. Also, make sure that the insurance company will cover the damages without refusing the claim. And here are three ways to choose the right property insurance.
- If you already have company A’s life insurance or automobile insurance, you can also take out company A’s home insurance. This simplifies the application process. In addition, home insurance companies typically offer attractive discounts and special offers to consumers who use more than one insurance plan.
- If you have a limited budget, choose protection that suits your environmental conditions. If your area is not on hills or mountains, or if you are far from the coast, you may not need protection from landslides and tsunamis.
- Some home insurers are willing to guarantee homes with a predominant timber component. This is because wood is a flammable building material. The recommended housing construction requirements are that bricks or other refractory materials should be used. Therefore, parquet floors are an exception.
Property insurance benefits
Most people still juxtapose investment and insurance. In fact, the monthly premium paid to an insurance company is not an investment that guarantees future profits. Although some insurance companies include investment in premiums as an additional benefit to their customers.
There are many benefits of property insurance that will probably make you understand how important it is to have this product. One of them is that property insurance covers the cost of damage to your property, including your home, even if the fallen tree hits your backyard. So what are the other benefits of property insurance?
1. Compensation for damage caused by natural disasters
If your property is damaged by a fire, hurricane, earthquake, hail, lightning strike, explosion, volcanic eruption, or other natural disaster, Asset Insurance will provide a replacement or repair. However, it does not include floods and disasters caused by human activities.
Not only that, some insurance companies offer temporary shelter in the event of a natural disaster. For example, if a fire breaks out and the resident cannot rest at home for a while. The insurance will then provide accommodation until your home is repaired.
2. Fire compensation
Some property insurance products cover only property damage caused by a fire. However, all risk property insurance covers all the disasters you have experienced. The fire clause covers property insurance as well as damages incurred according to the amount of insurance provided.
3. Exchange of lost assets
If your property, such as a diamond ring, is stolen during your vacation, you are entitled to a refund from your property insurance. However, be sure to document it with evidence of possession of the theft. Then you should be able to submit a police report to the insurance company.