Benefits of Property Insurance

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What Does Property Insurance Mean?

Property Insurance is a type of insurance policy that protects your residential & commercial properties against loss or damage. Natural calamities and man-made perils such as earthquakes, floods, storms, fire accidents, and theft can cause severe destruction to properties and their contents.

These abrupt events can occur anytime, resulting in substantial financial losses to property owners or occupants. Property insurance provides complete coverage for loss due to insured perils. There are various types of property insurance policies, such as Home Insurance, building insurance, shop insurance, fire insurance and flood insurance.

Who Needs Property Insurance?

Almost every person who owns an expensive property will require property insurance coverage. The requirement may arise in many cases due to mandatory legal or contract provisions. For instance, banks or financial institutions can make it a prerequisite to grant loans to their borrowers.

Even if it is not legally required, people often purchase property insurance to protect their homes, vehicles, jewellery, electronic items, or business assets. Specific factors such as climate, location, or nature of the business operations also warrant the purchase of property insurance.

Importance of Property Insurance

The future is always uncertain and unpredictable. Natural disasters such as floods, earthquakes, and storms can result in the destruction of your properties overnight. Apart from the destruction of buildings, all the contents inside them may be lost or damaged. Man-made perils such as theft, burglary, vandalism, and fire accidents also cause significant losses.

Property insurance provides compensation for such losses and helps to rebuild your life in the aftermath of an accident or disaster. Any loss or damage to third-party life and property is also covered under liability insurance.

Benefits of Buying Property Insurance

The advantages of property insurance are as follows:

Property insurance covers both personal & commercial assets against loss or damage due to unforeseen events.

Property insurance also covers the contents of your home or office buildings, such as furniture, gadgets, inventory, plant & machinery, and electronic equipment.

Both natural calamities and human perils are covered by property insurance.

Loss of large quantities of cargo can be catastrophic to any business. Property insurance covers goods in transit when they are transported by road, rail, sea, or air.

Liability insurance offers protection to policyholders against lengthy disputes and lawsuits.

Property insurance protects the interests of lenders like banks & financial institutions that offer huge loans to individuals and business entities for building assets.

Property insurance offers financial security and peace of mind to property owners who get compensated for unexpected losses.

Types of Coverage in Property Insurance

There are five broad types of coverage in property insurance. The details are as follows:

Home Insurance

A home insurance policy covers your residential premises against natural disasters, fire accidents, theft, and burglary. Apart from building damages, you also get coverage for the loss of valuable contents like furniture, gadgets, and other personal belongings.

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Benefits of Home Insurance

Commercial Property Insurance

Business establishments such as shops, hotels, offices, factories, and warehouses require protection against natural disasters and man-made events. They also need additional coverage to compensate for the loss of income due to loss of income due to business interruption. Commercial property insurance offers protection to business owners against unexpected losses.

Fire Insurance

Fire insurance covers all the damages caused by fire, lightning, explosions, and explosions. It protects both business and residential properties against fire-related risks. The policy provides compensation for the repair, replacement, and rebuilding of assets damaged by fire.

Property Insurance for Tenants

A property insurance policy purchased by the owner covers only the building structure. It does not cover the contents or assets of the tenant who occupies the building. A separate plan is available to protect the tenants against loss or damage to their assets.

Public Liability Insurance

Public Liability Insurance​ protects policyholders against lawsuits and third-party claims that may arise due to accidents on their properties. It covers bodily injuries to other people, damage to other properties, settlements, and expenses to defend oneself in a legal dispute.

Factors Affecting Property Insurance Premium Rates

The major factors which affect property insurance premium rates are listed below:

Nature & Size of the Business

High-risk businesses such as chemical factories, construction, or mining attract higher insurance premiums. The premiums are much higher for a large factory than for a small retail shop.

Type of Machinery & Equipment

The insurers charge a heavy premium if a business uses sophisticated machinery and expensive equipment for its operations. Older machines that are difficult to replace warrant higher premiums.

Geographical Location

If the property is situated in a region that is prone to earthquakes or floods, the premiums are bound to be higher as compared to safer locations

Age of the Property

Older buildings are highly vulnerable and get easily damaged due to accidents and disasters. The insurance provider charges higher rates to cover such properties. They may even refuse to cover dilapidated buildings.

Safety Measures

Adherence to safety regulations and installation of high-quality security equipment often result in lower property insurance premiums. These measures lower the risk for insurance companies.

Method of Payout

Under replacement value coverage, the insurer only provides compensation for replacing the damaged item with a new one. But in other cases, the payout is made after deducting depreciation on the asset. The latter plans typically have lower premiums.

Frequently Asked Questions About Property Insurance in UAE

Natural disasters and other perils like fire, burglary, or acts of vandalism can cause severe financial losses to your property. Property insurance provides comprehensive coverage to protect your buildings and their contents against such mishaps. It offers complete peace of mind to property owners.

Yes. Tenants can also purchase property insurance to protect their business assets or personal belongings within the building. Property insurance also covers them against potential third-party liabilities.

There are several property insurance plans available in the market. You can compare and evaluate the top ones. Study their coverage, features, benefits, premiums, and customer reviews. Select the plan that meets most of your requirements and fits your budget as well. You can also talk to our experts, who can help you make the right choice.

Generally, property insurance in the UAE covers the loss/damage to your house and its contents due to natural disasters, fire accidents, theft, and vandalism. It may not automatically cover home renovations or improvements. However, some insurance providers do offer add-on coverage to cover the cost of renovation if you inform them before you begin the project.

Disclaimer:  The property insurance or plan may have limitations, exclusions, and other terms and conditions that may affect coverage. It is important to carefully review policy documents to understand the terms and conditions that apply to the policy & make sure that it meets your specific needs and requirements.