Everything you need to know about Property Insurance

I just bought a house in one of the poshest areas of the city. Why do I need a property insurance? You might ask yourself this question if you are fortunate and have made a good living. However, property insurance has nothing to do with the area you live in or how big your house is. In simple terms it means minimizing the financial damage when it happens. How so? Let’s read till the end and find out what is property insurance and why you need one today.

 

What is Property Insurance?

Let’s suppose you just bought a car. It’s only been a few days and you’re out on a drive with your family. Suddenly someone hits your car and breaks its rear light. The car you bought was an expensive one and after research you find out it will be an expensive fix. If you don’t have insurance, you will have to pay the full amount at that time in order to get your fixed.

Now think of a similar scenario. Suppose you bought a house and you’ve spent all the money you had. Strong winds blow and a tree falls on your window. Apart from breaking the window it causes a few more damages to your house. In order to get those damages fixed you’d need to pay a lot of money up front if you don’t have any insurance.

Luckily, you made some wise decisions and decided to get property insurance. Now you won’t have to worry about getting that money. Your insurance will take care of it for you. If you don’t what insurance is, you might be confused as to how this works. Don’t worry everything will make sense in a while.

Basically, think of insurance companies as a bank. However, you don’t put your money in there so you can take cash out later. You give them money so you can use it later when something unfortunate happens. You pay them the agreed amount on monthly basis, and they provide you with coverage depending on your plan.

What type of coverage do insurance companies provide?

Insurance companies provide different types of coverages. It all depends on the type of plan you decide to opt for. In Pakistan insurance companies provide coverage in the following areas:

  • Coverage against Theft

In developing countries like Pakistan, law enforcement is still an on-going issue. Some areas don’t face the problem as much as others do. However, it still concerns the major population of the country. In case you suffer through an unfortunate event where something is stolen from your property your insurance provider will cover that for you. However, in order to get compensation from your insurance provider you will need to provide a proof that the item in question was indeed in your possession. That can be done by providing a purchase receipt to your insurance provider.

  • Coverage against Disasters

Property insurance also covers disasters such as fire eruption etc. There have been times where we have witnessed fire eruptions in different buildings across Pakistan. Some of them being large famous plazas. You may recall the massive fire that erupted in Hafeez center, Lahore on October 18th, 2020. Such types of disasters are covered by insurance companies and can help tremendously in rebuilding etc.

Apart from these many homes witness the same things. In cities where winds blow at high speeds or where rainstorms etc. are a common thing, several houses get affected. Sometimes the damage isn’t as bad, but in some cases the houses face severe damages to the infrastructure. In all these cases having a good insurance policy that provides you with good coverage helps a lot.

  • Coverage against mis-happenings on your property

Some insurance policies even provide you with accidental coverage on your property. What this basically means that if someone faces health or financial damage on your property, your insurance will take care of it. However, this is an added feature and is not covered in all packages. You will have to check with your insurance provider if they provide this service and in what package they provide this.

  • Coverage against vandalism on your property

Insurance companies also provide excellent coverage against property vandalism. This helps a lot in storing your property to its former glory.

 

Which companies provide insurance services in Pakistan?

If you’re looking for insurance coverage for your property, here is a list of the popular companies that provide these services:

  • Jubilee Insurance
  • Alfalah Bank Insurance
  • IGI General Insurance
  • Askari General Insurance

These are some of the most famous and well-known insurance providers in Pakistan. They are known for their good coverage plans, and good response to their customers.

Important things to remember while getting insurance for your property

While getting insurance for your property make sure you check the coverage they provide. Often times people get their insurance without checking the coverage they provide. When something bad happens and they put a request for claim, their request is rejected. That is because they find out their insurance policy does not cover that certain thing. Always check what coverage each company is providing before purchasing an insurance plan.

Make sure to find out if anything voids the validity of your insurance. For Example: In case of cars getting after market electrical parts voids the validity of the insurance. It is always better to find out earlier before any damage is caused.

If you’re a business, you should try to go for the most comprehensive insurance policy. This always comes in handy and is extremely helpful in case of a mis-happening. Homeowners should also go for insurance coverages that are comprehensive, but businesses in particular should look for comprehensive coverages. You should never cheap out on insurance plans as they can really help you out in times of need.

Why is property insurance mis-understood in Pakistan?

In Pakistan property insurance highly is mis-understood. People prefer not opting for insurance packages. The reason behind this is because they think spending money on insurance packages is wasted. People prefer spending that money elsewhere. Study shows that insurance sector only amounts to 0.9% of GDP. This is only because people don’t understand the importance of insurance at all. In developed countries such as the USA, getting an insurance is a must. You cannot do anything without getting an insurance first. That speaks for its importance and the reasons for getting one are discussed in this blog in detail.

Automotive insurance is starting to get attention in Pakistan, but it is still far behind. However, property insurance is barely on its foot with only a small amount of people utilizing it. Everyone should have their properties insured. People also have a misunderstanding that only businesses need insurance, which is also not entirely true. If you own any sort of property, be it a property for business purposes or a home you should get it insured.

 

What is Takaful insurance?

Takaful insurance is basically based on Shariah principles. It is based on the concepts of brotherhood. In takaful based insurances, the amount and coverage of the insurance is decided on the basis of the needs of each individual. Then the money is pooled in a Mutual Fund and is invested in Shariah compliant businesses. If one person faces a mishap of some sort, the mutual fund is used to cover the expenses of that person. This type of insurance makes sure that all the religious concerns of people specially of Muslims are addressed. Thus, if you’re looking for insurance but don’t want to compromise on any religious beliefs, you should go for Takaful based insurance.

 

Takaful vs Conventional insurance

Takaful businesses are strictly Shariah compliant whereas conventional businesses are not. Takaful businesses uphold the following Shariah elements:

  • The concept of premium money is not followed in Takaful insurances. What this means is that in conventional insurances, the insurer pays for the insured if a mishap happens. Whereas the insured pays a premium if nothing happens. This premium goes against Islamic laws thus is not practiced in Takaful based insurances. In takaful, the people who are a part of your mutual fund pool pay for the loss of the person who suffers mishappening.
  • Another important concept that is overlooked in conventional insurance is interest or Riba. Conventional insurance companies invest their money in interest bearing businesses. However, takaful based insurances are limited to only Shariah compliant, interest free businesses.

These major things are the key differences between conventional and takaful based insurance businesses. They are equally beneficial and provide equally effective coverages. However, if you are a non-Muslim or Shariah compliant insurances don’t matter to you that much then you can go with either of them. It all comes down to what is more suitable for you.

 

Bodla Group and its relationship with property insurance

We are a prestigious construction company with many successful property projects in Pakistan. DHA Multan being a shining feather in our cap speaks for the quality of work we provide. We believe that the people are unaware of benefits of property insurance.

Getting to buy your dream house is a big achievement for many but securing it with a good insurance is also very important. We at Bodla Group love to build homes and fulfill the dreams of many. It breaks our heart equally when people build houses with all the money, they can get their hands on, and that house faces mishappening. So don’t wait any further and get the insurance that suits you the most. Secure your properties, secure your investments, get property insurance today.