Property Insurance Coverage & Exclusions

Quick Answer: What Does Property Insurance Cover?

Property insurance generally covers physical loss or damage to buildings, plant and machinery, stock, and contents caused by insured perils such as fire, lightning, explosion, storm, or burglary – subject to the sum insured, selected extensions, and policy exclusions. Exact coverage always depends on the specific policy wording.

What Does Property Insurance Usually Exclude?

Most property policies exclude wear and tear, gradual deterioration, mechanical or electrical breakdown, intentional damage, war and nuclear risks, and consequential (financial) loss unless the policyholder purchases a specific extension. Underinsurance and undeclared property can also reduce or defeat a claim. Exclusions vary by insurer and product.

What Is Property Insurance Coverage?

“Property insurance” is not a single product – it is a broad category that includes Standard Fire and Special Perils (SFSP) policies, All-Risk Property Insurance, Burglary Insurance, and specialised covers such as Construction All Risk, Engineering All Risk, and Art Insurance. Each product responds differently to the same event, so understanding coverage means understanding the specific policy, not the umbrella term.

At its core, a property policy indemnifies the insured – pays to restore them to their pre-loss financial position – when insured property suffers physical loss or damage from a covered peril, up to the sum insured and subject to the policy’s terms, conditions, deductibles, and exclusions.

What Does Property Insurance Cover?

Buildings

Commercial buildings – offices, factories, warehouses, shops, and institutional premises – are typically insurable for their structure: walls, roof, floors, and permanently fixed fittings. Insurers usually write coverage on a reinstatement (replacement cost) or market value basis, and the choice materially affects how a claim settles.

Plant and Machinery

A policy can cover production machinery, industrial equipment, generators, electrical panels, HVAC systems, and other fixed equipment against the same insured perils as the building, or under a dedicated machinery/engineering policy for breakdown-type risks, which a standard fire policy usually does not cover.

Stock and Inventory

Raw materials, work-in-progress, finished goods, and trading stock are generally insurable, often on a fluctuating “declaration” basis so the sum insured tracks actual stock holding through the year rather than a single fixed figure.

Furniture, fixtures, computers, and general business equipment fall under contents cover, which is distinct from the building structure – a distinction that matters most in leased premises (see below).

Other Insurable Property

Valuable items, artwork, and specialised equipment usually need a dedicated rider or a separate policy such as art insurance, because standard property covers place strict sub-limits – or outright exclusions – on high-value, hard-to-value items. Property that is temporarily away from the insured premises (in transit, at a depot, or with a third party) generally needs a specific extension to stay covered.

What your policy actually covers depends on the policy type you choose, the property you declare, the sum insured, the perils you select, any extensions you purchase, the deductible, and the exclusions and conditions in the policy wording – two property policies won’t necessarily respond identically to the same loss.

Property Insurance Coverage vs Exclusions – Comparison Matrix

Property and Structural Risks

Item / Risk	Generally Covered?	Typical Conditions	Common Exclusion / Limitation	Notes
Fire	Generally covered under relevant policies	Peril must be accidental, not deliberate	Willful destruction is excluded	Core peril under SFSP-style policies
Lightning	Generally covered under relevant policies	—	—	Standard named peril
Explosion	Generally covered under relevant policies	Subject to policy definition of “explosion”	Explosion arising from war/nuclear excluded	Policy-dependent wording
Storm, cyclone, tempest	Generally covered under relevant policies	—	Gates, fences, outdoor structures often sub-limited/excluded	Policy-dependent
Flood/inundation	May require an extension	Often needs STFI cover to be active	Excluded if STFI not opted or premium not paid	Confirm with insurer before assuming cover
Earthquake	Usually excluded unless specifically covered	Needs a separate earthquake extension/premium	Standard fire perils list typically excludes it	High relevance in seismic zones
Water damage (burst pipe)	Policy-dependent	May need specific peril/extension	Gradual seepage generally excluded	Sudden/accidental escape treated differently
Theft/burglary	May require an extension	Often needs a separate burglary policy/add-on	Theft without forcible entry may be excluded	Distinct product/extension from fire cover
Accidental damage	May require an extension	Usually needs an All Risk/accidental damage extension	Not automatic under named-peril policies	Depends on policy type
Building damage	Generally covered under relevant policies	Subject to declared sum insured	Undeclared additions/alterations may be excluded	Must intimate structural changes
Machinery (fire damage)	Generally covered under relevant policies	—	Mechanical/electrical breakdown usually excluded	Breakdown needs separate cover
Furniture & fixtures	Generally covered under relevant policies	—	Wear and tear excluded	Contents category

Contents, Financial and Special Risks

Item / Risk	Generally Covered?	Typical Conditions	Common Exclusion / Limitation	Notes
Office equipment	Generally covered under relevant policies	May need electronic equipment extension	Gradual deterioration excluded	—
Stock/inventory	Generally covered under relevant policies	Often on declaration basis	Spoilage from temperature change may be excluded	Cold-storage stock needs specific wording
Raw materials/finished goods	Generally covered under relevant policies	Subject to accurate valuation	Underinsurance reduces payout proportionately	—
Money/cash	Usually excluded unless specifically covered	Needs money/cash-in-safe extension	Standard property exclusion	Separate crime/fidelity products exist
Wear and tear	Usually excluded	—	Universal exclusion across property products	Not an insurable “event”
Gradual deterioration	Usually excluded	—	Distinguished from sudden accidental damage	—
Intentional/willful damage	Usually excluded	—	Deliberate acts never covered	Moral hazard principle
Consequential loss	Usually excluded unless specifically covered	Needs Business Interruption cover	Physical damage cover ≠ income cover	Separate product line
War and allied perils	Usually excluded	—	Standard market exclusion globally	Specialist war-risk cover may exist
Nuclear risks	Usually excluded	—	Standard market exclusion	Specialised nuclear pools handle this class
Uninsured/undeclared property	Not covered	Must be declared and premium paid	Excluded by definition	Applies to stock, new locations, new assets
Underinsurance	Payout reduced proportionately	Sum insured must reflect actual value	“Average clause” applies in many policies	Settlement reduction, not a blanket exclusion

This table describes coverage in general, policy-dependent terms. The exact policy wording, exclusions, and conditions of your specific product always take precedence.

What Does Property Insurance Usually Exclude?

Exclusions exist because certain losses are not “fortuitous” (sudden and accidental), are uninsurable at reasonable cost, or a different, specialised product handles them better. Common categories include:

Wear and Tear

Ordinary deterioration from age and use does not count as an insured event – insurance covers accidental loss, not the natural life cycle of an asset.

Gradual Deterioration

Insurers typically treat damage that develops slowly (corrosion, rust, seepage over months) differently from a sudden, identifiable loss event, and usually exclude it.

Intentional Damage

Deliberate acts by the insured, or damage caused with the insured’s connivance, break the fundamental insurance principle that a loss must be fortuitous.

War and Certain Political Risks

Property policies almost universally exclude loss caused by war, invasion, and similar perils; insurers generally consider these risks uninsurable in a standard commercial property product.

Nuclear Risks

Loss or damage arising from nuclear reaction, radiation, or contamination is a standard, near-universal exclusion, reflecting the scale and nature of the risk.

Consequential Loss

Physical damage cover pays to repair or replace damaged property – it does not automatically compensate for the income a business loses while it is shut down for repairs. That risk needs a Business Interruption or consequential loss policy.

Uninsured Property

An asset the policyholder never declared, or a new location they never told the insurer about, generally falls outside the scope of the policy, even if it physically sits at an insured premises.

Underinsurance

If the declared sum insured is lower than the actual value of the property, many policies apply an “average clause,” which reduces the claim payout in the same proportion as the shortfall – this is a settlement mechanism, not a blanket exclusion, but its practical effect on a claim can be severe.

Policy Conditions

Breach of a warranty or condition – such as failing to maintain fire safety equipment as declared, or not intimating structural alterations – can affect coverage for the relevant loss, depending on policy wording and applicable law.

Other Common Exclusions

Depending on the product, policies may also exclude mechanical or electrical breakdown, loss during unlawful activity at the premises, and damage to specific outdoor fixtures such as gates and fences under storm cover.

The exact exclusions depend on the policy wording, insurer, product, and selected extensions.

General Exclusions Common Across Property Insurance Products

Exclusion Category	What It Means	Why It May Be Excluded	Can It Sometimes Be Covered?
Wear and tear / gradual deterioration	Damage from normal use or slow decay over time	Not a fortuitous, insurable event	No — inherent to the exclusion’s purpose
Mechanical/electrical breakdown	Internal failure of machinery or wiring, not caused by an external peril	Treated as an engineering risk, not a property-damage risk	Yes, via a separate machinery breakdown or electronic equipment policy
Intentional damage	Deliberate acts by the insured or with their connivance	Violates the principle of fortuity and utmost good faith	No
War and nuclear risks	Loss from armed conflict or nuclear reaction/radiation	Considered uninsurable at conventional scale and pricing	Rarely, and only through specialist markets
Consequential loss	Lost income, profits, or extra costs following physical damage	A different risk category from physical asset damage	Yes, via Business Interruption cover
Underinsurance	Sum insured lower than actual value	Protects the insurance pool from being underfunded relative to risk	Avoided by maintaining accurate valuations, not “covered” after the fact
Undeclared/uninsured property	Assets or locations not declared to the insurer	The insurer never priced or accepted that risk	Yes, if declared and premium paid before the loss
Breach of warranty/condition	Failure to meet a stated obligation (security, fire safety, intimation of changes)	Underwriting was based on the insured meeting these conditions	Depends on policy wording and the nature of the breach

Property Insurance Cover for Leasehold & Freehold Properties

Ownership structure changes who has an insurable interest in what, but it does not follow a simple rule. It is a common misconception that “freehold means the owner insures everything” and “leasehold means the tenant insures everything.” In practice, the lease agreement, the nature of the property, and each party’s insurable interest set responsibility – not ownership type alone.

Freehold Property

In a freehold arrangement, the owner holds the property and the underlying land without time limitation. This typically gives the freeholder the clearest insurable interest in:

The building structure – walls, roof, floors, and fixed elements
Permanent fixtures and improvements the owner has made
Contents the freeholder owns, if the property is owner-occupied
Liability arising from ownership of the structure

Because the freeholder’s interest extends to the entire physical asset, freehold cover is usually broader in scope than a tenant’s cover for the same building – but the freeholder is not automatically responsible for a tenant’s contents, stock, or business assets inside a let-out property.

Leasehold Property

A lease agreement with the landowner time-limits a leasehold interest and governs it. Insurable interest here is split, and the split depends on the lease:

The landlord typically retains an insurable interest in the building structure, unless the lease transfers that responsibility
The tenant typically has an insurable interest in their own contents, stock, business equipment, and any improvements or fixtures they have installed at their own cost
Some leases make the tenant contractually responsible for insuring the structure, or for reimbursing the landlord’s premium – check this in the lease, do not assume it
Tenant improvements (fit-outs, partitions, cabling) sit in a grey zone, and both the lease and the policy schedule should explicitly address them

Because the lease agreement, not the label “leasehold,” determines who is contractually responsible for what, tenants and landlords should read the lease’s insurance clause carefully rather than assume the split.

Leasehold vs Freehold Comparison

Factor	Freehold Property	Leasehold Property
Ownership	Full, indefinite ownership of land and building	Time-limited right to occupy under a lease
Insurable interest	Owner has interest in the whole structure and land improvements	Split between landlord (structure) and tenant (contents/fit-out), per the lease
Building responsibility	Generally the freeholder	Generally the landlord, unless the lease states otherwise
Contents	Owner’s contents, if owner-occupied	Tenant’s contents, almost always the tenant’s responsibility
Fixtures/improvements	Owner’s fixtures form part of the structure	Tenant-installed fixtures need explicit treatment in lease and policy
Tenant responsibility	Not applicable	Contents, stock, business equipment, often tenant improvements
Landlord responsibility	Not applicable	Building structure, usually – subject to lease terms
Insurance considerations	Broader single policy is common	Often two policies you must check for gaps or overlaps
Example	Business owns its factory outright, insures structure, machinery, stock together	Retailer leases a shop; landlord insures shell, retailer insures fixtures/stock/contents

Leasehold Property Examples

Example 1 – Office in a leased commercial building. The tenant typically needs to insure computers, furniture, and business contents, plus any fit-out they installed. The landlord typically insures the building shell. The lease agreement determines whether the tenant must also reimburse the landlord’s insurance cost or carry liability cover for the space – always confirm this rather than assume.

Example 2 – Factory operating from leased premises. The tenant generally insures plant and machinery, stock, and any structural improvements they funded, while the landlord insures the base building. Given the scale of assets typically involved, a clear written understanding of where the landlord’s cover ends and the tenant’s begins is essential.

Example 3 – Retail shop in a leased property. The retailer typically insures contents, stock, and shop fixtures; the landlord typically insures the building. Because tenants often fund retail fit-outs (signage, counters, flooring upgrades), they should specifically list these in the tenant’s policy schedule.

In every case, actual responsibility depends on the lease and the policy – not a general assumption about leasehold versus freehold.

Property Insurance Add-ons and Extensions

Add-ons broaden a base property policy beyond its standard scope. They are optional, cost extra, and are not universally available under every property product – availability depends on the insurer, the underlying policy, and underwriting appetite for the specific risk.

Common Add-ons

Earthquake extension –

It brings earthquake-related loss into scope, since it usually sits outside the standard fire perils list; relevant for properties in seismic zones.

Flood / STFI extension –

It activates storm, tempest, flood, and inundation cover, which is often optional rather than automatic.

Burglary cover –

It extends or pairs with a fire policy to address theft involving forcible or violent entry, distinct from ordinary fire perils.

Machinery breakdown / electronic equipment cover –

It addresses internal mechanical or electrical failure, which a standard fire policy typically excludes.

Accidental damage extension –

It moves the policy closer to an “all risk” basis by covering sudden, unforeseen damage not tied to a named peril.

Terrorism cover –

It reinstates cover for terrorism-related loss, frequently carved out of the base policy and sold as a standalone extension.

Debris removal –

It pays the cost of clearing debris after an insured event, which can add a significant, unbudgeted expense after major damage.

Professional fees extension –

Covers architects’, surveyors’, or consulting engineers’ fees incurred in reinstating damaged property.

Escalation clause –

It automatically increases the sum insured through the policy year to keep pace with inflation in rebuilding or replacement costs.

Floater / declaration-based cover –

Lets stock sums insured fluctuate with actual holding, useful for businesses with seasonal or variable inventory.

Reinstatement value cover –

Settles claims on a “new for old” basis rather than depreciated value, avoiding a gap between claim proceeds and actual rebuilding cost.

Loss of rent –

It compensates a landlord for rental income lost while a damaged property undergoes repairs and is uninhabitable.

Alternative accommodation –

It covers temporary housing or premises costs while the insured location undergoes repairs.

Business interruption / consequential loss cover

A distinct policy (or section) covering lost income and continuing fixed costs after physical damage halts operations.

Deterioration of stock/spoilage cover –

It addresses stock loss from temperature change or power failure, often relevant to cold storage.

Temporary removal –

It extends cover to property temporarily moved off the insured premises for repair, exhibition, or processing.

Not every extension listed above is available under every property insurance product – availability, wording, and pricing depend on the insurer, the base policy, and underwriting.

Which Add-ons May Be Useful for Different Risks?

Risk / Requirement	Potential Add-on / Extension	Who May Need It	Why
Earthquake-prone location	Earthquake extension	Owners/occupiers in seismic zones	Standard policies typically exclude earthquake by default
Flood exposure	STFI / flood extension	Ground-floor or low-lying premises, flood-prone regions	Flood is not automatically part of base fire cover
High-value machinery	Machinery breakdown cover	Manufacturers, factories	Internal breakdown is excluded from standard fire perils
Sensitive electronic equipment	Electronic equipment extension	Offices, data centres, labs	Power surge/internal fault often excluded otherwise
Business interruption exposure	Business Interruption / consequential loss policy	Any revenue-generating business	Physical damage cover alone does not replace lost income
Large/fluctuating stock holdings	Declaration/floater cover	Traders, manufacturers, wholesalers	Fixed sum insured may not track real stock value
Leased premises with tenant fit-outs	Tenant improvements/fixtures cover	Tenants in leased commercial space	Landlord’s policy usually excludes tenant-funded improvements
Valuable fixtures or specialised assets	Specific item rider or separate specialised policy	Businesses with high-value, hard-to-value assets	Standard policies apply sub-limits or exclusions on such items
Terrorism exposure	Terrorism extension	High-footfall or high-profile commercial premises	Frequently carved out of the base policy
Significant debris-removal costs	Debris removal extension	Large industrial or multi-storey premises	Clearance costs after a major loss can be substantial

Aim for risk-based selection – add coverage that matches your actual exposure, not every extension on the list.

Named-Peril / SFSP vs All-Risk Property Insurance

Named-Peril / SFSP-style Coverage

A named-peril policy – the Standard Fire and Special Perils (SFSP) structure common in India – pays only for loss caused by perils explicitly listed in the policy (fire, lightning, explosion, storm, and similar named events). If something not on the list causes a loss, the policy does not cover it, regardless of how the damage occurred.

All-Risk Property Insurance

An all-risk policy flips the logic: it covers any cause of loss that the policy wording does not specifically exclude. This generally gives broader protection than a named-peril policy, but “all-risk” does not mean the policy covers everything – the exclusions section still carves out wear and tear, intentional damage, war, nuclear risk, and other standard exclusions.

Practical difference: under a named-peril policy, the insured must show the loss falls within a listed peril; under an all-risk policy, the insurer must show the loss falls within a listed exclusion. This shifts the burden of proof, which is why buyers often prefer all-risk cover for complex operations – but it typically carries a higher premium and does not eliminate exclusions.

Building vs Contents Coverage

Aspect	Building	Contents
What it covers	The physical structure – walls, roof, floors, fixed fittings	Movable/semi-movable items – furniture, stock, equipment, fixtures owned by the occupant
Typical insured	Owner/freeholder, or landlord in a leased property	Occupant – owner-occupier or tenant
Examples	Factory shell, office block, warehouse structure	Machinery, computers, inventory, office furniture
Leasehold relevance	Usually the landlord’s responsibility	Usually the tenant’s responsibility, including tenant-funded fit-outs
Why both matter	Without it, structural damage stays uninsured	Without it, business assets/stock stay uninsured even if the building has cover

Both covers are often necessary for a business – insuring only the structure leaves stock and equipment exposed, and insuring only contents leaves the building itself uninsured.

How Sum Insured and Valuation Affect Coverage

The sum insured is the maximum the policy will pay and the figure the insurer uses to calculate the premium – but it must also reflect the actual value of the property, or the insurer can reduce a claim even if the policy fully covers the loss itself.

Reinstatement/replacement basis pays what it costs to rebuild or replace the asset new, without deducting depreciation.
Market value basis reflects current resale value, which is usually lower than replacement cost for an aging asset.
Book value reflects accounting value after depreciation, which may diverge significantly from real-world replacement cost.
Stock valuation should reflect actual cost or market value of inventory at the time of loss, and is often the figure most prone to becoming outdated.

Underinsurance example: if a building is actually worth ₹1 crore but insured for only ₹60 lakh, many policies apply an average clause: the insurer settles the claim in the same proportion as the sum insured bears to the actual value (60%), even for a partial loss. On a ₹10 lakh claim, the average clause could reduce the payout to roughly ₹6 lakh. The exact mechanism and whether an average clause applies depends entirely on the policy wording – this example illustrates the principle, not a guaranteed calculation for any specific policy.

The appropriate valuation basis depends on the policy, and you should confirm it with the insurer or broker before finalising the sum insured.

Understanding Deductibles / Excess

A deductible (or excess) is the portion of every claim the insured bears before the insurer pays the remainder. A higher deductible generally lowers the premium because it reduces the insurer’s exposure to small, frequent claims – but it also means the insured carries more of the risk on modest losses.

Example: With a ₹50,000 deductible on a ₹5 lakh claim, the insurer pays ₹4.5 lakh and the insured absorbs the first ₹50,000. The appropriate deductible level depends on the insured’s risk appetite, claims history, and the specific policy on offer.

How Insurers Evaluate Property Insurance Claims

A loss occurring at an insured location does not automatically mean the claim is payable. Insurers generally evaluate a claim through these stages:

Loss event occurs and the insured identifies it
Immediate mitigation – the insured must take reasonable steps to prevent the loss from worsening
Notification to the insurer within the policy’s specified timeframe
Documentation – photographs, inventories, purchase records, and other proof of loss
Survey/assessment by an insurer-appointed surveyor to establish cause and quantum
Policy coverage review – checking whether the peril, property, and location are within scope
Deductible applied to the assessed loss
Exclusions check – confirming the cause of loss isn’t excluded
Settlement, adjusted for underinsurance if the average clause applies

Because coverage, deductibles, exclusions, and conditions all interact, the same physical event can produce very different outcomes for two policyholders with different policy wordings.

Practical Property Insurance Coverage Examples

Example 1 – Factory Fire. A fire policy may cover building, machinery, and stock damage, subject to accurate valuation. Loss of production income is a separate exposure; a Business Interruption policy addresses it only if the insured purchased that cover. Wear-related equipment failure that contributed to the fire could complicate the claim, depending on the surveyor’s findings and policy wording.

Example 2 – Flood Damage to Warehouse. Whether the loss is payable depends heavily on whether an STFI/flood extension was active at the time of loss – flood is frequently not part of the base fire perils list. Stock valuation accuracy directly affects the settlement if stock suffers damage.

Example 3 – Leased Office. The landlord’s policy typically responds for structural damage; the tenant’s policy typically responds for contents and, if specifically covered, tenant improvements. Gaps between the two policies are common and worth checking proactively, not after a loss.

Example 4 – Business Interruption. A fire policy may fully cover physical repair costs after a fire damages a retail unit, while the income lost during closure remains uncovered unless the insured has a separate Business Interruption policy or section in place – physical damage cover and loss-of-income cover are not the same thing, and insurers usually sell them, and policyholders need them, separately.

The insurer does not guarantee any outcome above; each depends on the specific policy in force and the circumstances of the loss.

How to Avoid Property Insurance Coverage Gaps

Conduct a periodic asset inventory covering building, machinery, stock, and contents
Maintain accurate, current valuations rather than relying on old figures
Review lease agreements to confirm who is responsible for insuring what
Identify major risks specific to the property’s location and use (flood zone, seismic zone, high-value equipment)
Review the exclusions section of the policy, not just the coverage summary
Consider extensions that match actual risk exposure, rather than defaulting to the base policy
Check that the deductible level matches risk appetite
Review the policy annually rather than auto-renewing without reassessment
Update sums insured to reflect current replacement costs and stock levels
Maintain records (invoices, photographs, maintenance logs) that would support a claim
Understand notification and documentation requirements before a loss occurs, not during one

How to Read Property Insurance Coverage

Before relying on any property policy, review:

Insured property – what the policy actually lists and describes
Sum insured – and whether it is current
Covered perils – named-peril list or all-risk basis
Extensions – what the policyholder has actually purchased, not just what is available
Exclusions – the full list, not a summary
Deductibles – applicable to each type of loss
Valuation basis – reinstatement, market, or book value
Policy conditions – warranties, intimation requirements
Security requirements – locks, alarms, guards, if specified
Claims notification requirements – timeframes and process
Special warranties or conditions specific to the risk

Geographic or location limits – where cover applies

Frequently Asked Questions

Q) What does Property Insurance cover?

A) It generally covers physical loss or damage to buildings, machinery, stock, and contents from insured perils like fire, lightning, and storm, subject to the sum insured, extensions, and exclusions in the specific policy.

Q) What is usually excluded from Property Insurance?

A) Wear and tear, gradual deterioration, mechanical/electrical breakdown, intentional damage, war, nuclear risk, and consequential (income) loss are commonly excluded unless specifically covered.

Q) Does Property Insurance cover fire?

A) Yes, fire is typically the core insured peril under Standard Fire and Special Perils-style policies, subject to the policy’s terms and conditions.

Q) Does Property Insurance cover flood?

A) Only if a flood or STFI (Storm, Tempest, Flood, Inundation) extension has been specifically purchased; it is generally not automatic under a base policy.

Q) Does Property Insurance cover burglary?

A) Burglary usually needs a separate burglary policy or add-on rather than being automatically included in a standard fire policy.

Q) What are Property Insurance add-ons?

A) Optional extensions – such as earthquake, flood, machinery breakdown, terrorism, or business interruption cover – that broaden a base policy’s scope for an additional premium.

Q) What is the difference between basic coverage and an add-on?

A) Basic coverage is what the base policy includes by default; an add-on is an optional extension purchased separately to cover a risk the base policy does not automatically include.

Q) Is leasehold property covered by Property Insurance?

A) Yes, but coverage is typically split between the landlord (building structure) and tenant (contents, stock, tenant improvements), based on the lease agreement.

Q) Who insures a leasehold property – the landlord or tenant?

A) It depends on the lease. The landlord commonly insures the structure and the tenant insures contents and fit-outs, but leases can shift these responsibilities, so the agreement itself should be checked.

Q) What is the difference between freehold and leasehold Property Insurance?

A) Freehold cover typically spans the entire structure and land improvements under one owner’s policy; leasehold cover is typically split between the landlord’s building policy and the tenant’s contents policy, as defined by the lease.

Q) Does Property Insurance cover building and contents?

A) Both can be covered, but often under separate sections or separate policies, especially in leased premises – a policy limited to contents will not cover structural damage, and vice versa.

Q) Does Property Insurance cover machinery?

A) Fire and allied perils to machinery are typically covered under a standard property policy; internal mechanical or electrical breakdown usually needs a separate machinery breakdown extension.

Q) Does Property Insurance cover stock?

A) Yes, generally, often on a declaration basis so the sum insured can track fluctuating stock levels through the year.

Q) Does All-Risk Property Insurance cover everything?

A) No. All-risk cover is broader than named-peril cover, but it still carries a list of exclusions – “all risk” describes the coverage trigger, not unlimited coverage.

Q) Does Property Insurance cover business interruption?

A) Not under a standard physical damage policy. Business Interruption or consequential loss cover is typically a separate policy or section addressing lost income.

Q) What items are excluded from Property Insurance?

A) Common exclusions include wear and tear, intentional damage, war, nuclear risk, mechanical/electrical breakdown, and consequential loss – the precise list depends on the policy.

Q) What is underinsurance?

A) Underinsurance is when the sum insured is lower than the actual value of the property, which can trigger an average clause that proportionately reduces claim settlements.

Q) How do deductibles affect Property Insurance claims?

A) The deductible is subtracted from every admissible claim before settlement; a higher deductible usually lowers the premium but increases the insured’s share of smaller losses.