What Are the Types of Property Insurance?
Major policy types covered in this guide:
- Fire / Standard Fire and Special Perils (SFSP)
- All-Risk Property Insurance
- Building Insurance
- Contents Insurance
- Erection All Risk (EAR)
- Contractor’s All Risk (CAR)
- Factory & Industrial Property Insurance
- Warehouse Property Insurance
- Burglary Insurance
- Art / Fine Art Insurance
Introduction
Every physical asset a business or household owns – a building, machinery, stock, furniture, or a valuable art collection – carries a risk of loss from fire, storm, burglary, or accidental damage. Property insurance exists to transfer that financial risk to an insurer. But “property insurance” is not a single product. It is a broad category that includes standalone policies (like Fire/SFSP or Burglary insurance), specialized project covers (like CAR and EAR), and coverage structures that insurers can combine depending on what you are insuring and at what stage of its life.
Choosing the wrong type – or assuming one policy automatically covers everything – is one of the most common and costly mistakes property owners make. This guide walks through each major type of property insurance available in India, what each one actually covers, which assets it applies to, and how to decide which policy (or combination of policies) fits a given property or project. Throughout, one rule holds: coverage depends on the policy wording and selected extensions, and no summary in this guide substitutes for reading the actual policy document.
What Are Property Insurance Policies?
Property insurance policies are contracts that compensate a policyholder for financial loss arising from physical damage to, or loss of, insured property – buildings, contents, machinery, stock, or specialized assets – caused by defined perils such as fire, storm, flood, burglary, or accidental damage. Some policies (Fire/SFSP) list the specific perils they cover (“named perils”); others (All-Risk) cover everything except what the policy specifically excludes. You can buy property insurance as a standalone policy for one asset (e.g., Building Insurance) or as a package combining several coverages (e.g., a factory policy that bundles building, contents, stock, and burglary cover).
Property Insurance Comparison Table
Coverage depends on the policy wording and selected extensions in every case below.
| Policy / Coverage | What It Protects | Typical Assets | Main Risks Covered | Best Suited For | Key Limitations | Type |
|---|---|---|---|---|---|---|
| Fire / SFSP | Structure and/or contents against listed perils | Buildings, factories, offices | Fire, lightning, explosion, storm/cyclone (STFI) | Standard, cost-effective base cover | Only covers named perils; earthquake/STFI often add-ons | Standalone |
| All-Risk Property Insurance | All physical loss/damage except listed exclusions | Buildings, machinery, contents, stock | Broadest coverage – fire, burglary, accidental damage | Complex operations, varied risk | Excludes wear & tear, breakdown (unless extended), war/nuclear | Standalone |
| Building Insurance | The physical structure/fixtures | Walls, roof, foundation | Fire, storm, flood, collapse (per policy) | Protecting the property “shell” | Does not cover movable contents | Standalone / part of package |
| Contents Insurance | Movable items inside a building | Furniture, equipment, stock | Fire, theft, accidental damage (per policy) | Tenants, businesses, homeowners | Does not cover the building itself | Standalone / part of package |
| Erection All Risk (EAR) | Machinery during installation | Machinery, equipment being installed | Installation, testing, transit-to-site damage | Machinery in erection/commissioning phase | Ends at handover; not for operational machinery | Project policy |
| Contractor’s All Risk (CAR) | Civil works in progress | Buildings, roads, bridges under construction | Fire, collapse, theft, flood, landslide | Active construction projects | Ends at handover; not for completed structures | Project policy |
| Factory & Industrial | Industrial premises + assets | Factory buildings, plant, machinery, stock | Fire, machinery damage, business interruption (extended) | Manufacturers, industrial units | May need multiple sections for full protection | Package |
| Warehouse | Storage facility and stored goods | Warehouse structure, inventory | Fire, flood, burglary, stock damage | Storing owned or third-party goods | Ownership/contractual responsibility affects who insures what | Package / standalone |
| Burglary Insurance | Property lost/damaged to burglary | Contents, stock, cash in locked safe | Theft with forcible/violent entry or exit | Offices, shops, homes wanting theft cover | Requires proof of forced entry; excludes internal theft | Standalone/extension |
| Art / Fine Art | Valuable artwork and collectibles | Paintings, sculptures, antiques | Theft, fire, accidental damage, transit/exhibition risk | Assets not fairly valued by standard depreciation | Valuation method significantly affects claims | Standalone specialized |
Types of Property Insurance
Fire / Standard Fire and Special Perils (SFSP)
What is it? SFSP is the foundational named-perils property insurance product in India. It insures a building and/or its contents against a defined list of perils – fire, lightning, explosion/implosion, storm, cyclone, typhoon, flood and inundation (often bundled as the “STFI” peril group), impact damage, riot, strike, and malicious damage, among others named in the policy.
What does it cover? Only the perils explicitly listed in the policy. If a loss falls outside that list, the policy does not cover it – regardless of how the loss occurred.
What assets can be insured? SFSP can insure commercial and industrial buildings, factories, offices, godowns, shops, and their contents, plant and machinery, and stock – each either together or separately.
Who typically needs it? Businesses and property owners who want reliable, cost-effective cover against the most common catastrophic perils, without paying for broader all-risk coverage they may not need.
What is generally not covered? Perils not named in the policy (e.g., burglary, unless specifically included or bought separately), wear and tear, and – depending on the insurer – earthquake, which is often available only as an add-on rather than automatically included.
Example: A textile factory insures its building and machinery under an SFSP policy. A short-circuit triggers a fire that damages the roof and part of the machinery – the policy covers both because fire is a named peril.
When should you consider it? SFSP is usually the right starting point for most buildings and industrial premises because it is a well-understood, competitively priced product that covers the perils causing most property losses in India.
All-Risk Property Insurance
What is it? All-Risk property insurance (sometimes known as comprehensive property insurance) flips the SFSP logic: instead of listing what it covers, it covers everything except what the policy’s exclusion clause specifically excludes.
Why “all-risk” does NOT mean “everything is covered”: Buyers misunderstand this term more than any other in property insurance. “All-risk” describes the structure of the coverage (exclusion-based rather than inclusion-based), not an unlimited guarantee. Every all-risk policy carries a defined exclusion list.
What does it cover? The policy covers a loss only if it does not fall under any listed exclusion, and the loss must otherwise be a fortuitous (accidental, sudden) event, subject to the sum insured and any deductible.
What assets can be insured? Buildings, machinery, stock, and business contents – particularly where the business faces a wide and varied set of risks that would be cumbersome to list individually under a named-perils structure.
Who typically needs it? Manufacturing units, offices, and businesses with diverse asset types that want to reduce the chance of an uncovered gap between named perils.
What is generally not covered? Depreciation/wear and tear, mechanical or electrical breakdown (unless extended by rider), war and nuclear risks, damage during cleaning/dyeing/repairing/restoring, and scratching, denting, or damage to brittle items.
Example: A Pune-based engineering business bought all-risk cover for its office and equipment. It later paid an extra premium to extend the policy to include electrical and mechanical breakdown, since baseline all-risk terms did not automatically include this.
When should you consider it? When the property owner wants the broadest practical protection and is willing to pay a higher premium for fewer coverage gaps – particularly for businesses with equipment-heavy or operationally complex premises.
Building Insurance
What is it? Building insurance (also called building structure insurance) covers the physical structure of a property – walls, roof, foundation, and permanent fixtures – but not its movable contents.
What does it cover? Damage or destruction to the structure caused by covered perils such as fire, storm, flood, lightning, and other listed events, depending on the policy chosen (SFSP-style or all-risk).
What assets can be insured? Commercial buildings, offices, factories, warehouses, shops, and residential structures (independent houses, apartments, villas).
Who typically needs it? Property owners – whether of a home, office, or commercial building – who want to protect the physical asset itself, distinct from what is inside it.
What is generally not covered? Movable contents; and generally only the party with an insurable interest (typically the owner) can insure the building – a tenant does not have an insurable interest in the structure itself.
Example: A landlord insures the structure of a rented commercial building; if a fire damages the roof, the landlord’s building policy pays for repair, while the tenant’s own contents remain the tenant’s responsibility to insure separately.
When should you consider it? Whenever you own a structure – residential or commercial – building insurance is typically the base layer of protection, often combined with contents insurance for full coverage.
Contents Insurance
What is it? Contents insurance covers the movable property inside a building – furniture, fixtures, equipment, stock, and personal or business belongings – separate from the structure itself.
What does it cover? Loss or damage to contents from covered perils, which may include fire, theft, and accidental damage depending on the policy.
What assets can be insured? Furniture, electrical appliances, computers and office equipment, stock and inventory, and other movable items owned by the policyholder.
Who typically needs it? Tenants (for their belongings), homeowners seeking coverage beyond the structure, and businesses insuring office or shop contents.
What is generally not covered? The building/structure itself – contents cover applies only to movable items and does not extend to structural damage.
Example: A tenant renting an apartment buys a contents policy covering furniture and electronics; when a burst pipe damages furniture, the contents policy responds, while the building’s structural repair is the landlord’s insurer’s responsibility.
When should you consider it? Whenever you keep movable assets of meaningful value in a rented or owned space, contents insurance is often the more relevant policy for tenants and businesses with valuable equipment or stock.
Erection All Risk (EAR)
What is it? Erection All Risk (also called Engineering All Risk) insurance is a project-specific policy that covers plant and machinery during storage, assembly, installation, and testing – the erection phase – rather than during normal operation. EAR typically incepts from the moment workers unload the first consignment of machinery at the project site and terminates on completion of testing or handover of the completed installation to the owner/principal.
What does it cover? Risks like mishandling during assembly, testing failures causing physical damage, and site perils (fire, flood, etc.) during the installation period.
What assets can be insured? New machinery, plant, and equipment at a project site during installation, assembly, or commissioning.
Who typically needs it? Principals (the business installing the machinery), erection contractors, and sometimes machinery suppliers, depending on contractual risk allocation.
What is generally not covered? Operational machinery once commissioned and handed over – from that point, coverage must shift to a standard operational property policy (SFSP or all-risk), not EAR.
Example: An infrastructure company installing heavy underwater equipment buys EAR to cover the assembly and testing phase; when an accident during assembly damages a component, the EAR policy responds because the loss occurred within the erection window.
When should you consider it? Whenever a project is installing, assembling, or commissioning new plant or machinery, EAR closes the gap between marine/transit insurance (which ends at delivery) and operational property insurance (which starts once the asset is in service).
Contractor’s All Risk (CAR)
What is it? Contractor’s All Risk insurance covers civil engineering and construction projects – buildings, roads, bridges, airports, and similar works – while they are under construction. It typically covers the works themselves, construction materials, and sometimes contractor’s plant and equipment on site.
What does it cover? Fire and lightning, structural collapse or collision, theft and burglary of materials, water damage, storm and flood, and landslide/rockslide – the risks a site faces from the moment materials arrive until project handover.
What assets can be insured? Buildings, roads, bridges, and other civil works under active construction, along with construction materials on site.
Who typically needs it? Contractors, developers, and sometimes the project owner (as a joint insured), reflecting the shared financial interest in the project until completion.
What is generally not covered? The finished, operational asset – CAR ends at project handover; a separate CAR-vs-EAR distinction also applies, since EAR covers machinery erection, not civil works.
Example: A real-estate developer’s residential project suffers site damage from heavy rainfall during construction; because the project carries CAR cover, a surveyor assesses the damage and settles the claim, limiting the developer’s financial loss.
When should you consider it? Developers should insure any construction project – from a single building to large civil infrastructure – under CAR for the duration of the works, since standard property policies do not address construction-stage risk.
Factory & Industrial Property Insurance
What is it? Factory and industrial property insurance is a package-style cover that addresses the layered risks manufacturing units, factories, and industrial plants face – combining building, plant and machinery, stock, and sometimes liability coverages depending on what the buyer selects.
What does it cover? Depending on the structure chosen, a factory policy may cover the factory building, installed machinery, and inventory at every stage of production (raw material, work-in-progress, finished goods), either bundled together or as separately declared sections.
What assets can be insured? Factory buildings, plant and machinery, raw materials, work-in-progress, finished goods, and general business stock.
Who typically needs it? Manufacturers and industrial businesses operating a factory, plant, or production facility.
What is generally not covered? Machinery breakdown, business interruption, and specific stock risks (like burglary of finished goods) may require separate extensions or standalone covers rather than being automatic.
Example: A manufacturing unit insures its factory building and machinery under an SFSP policy while separately taking a floater stock policy to cover fluctuating raw material and finished goods inventory.
When should you consider it? Any operating factory or industrial facility needs a combination of structural, machinery, and stock coverage – reviewing each exposure separately, rather than assuming one policy automatically covers all three, avoids costly gaps.
Warehouse Property Insurance
What is it? Warehouse insurance covers storage facilities and the goods held within them – whether owned by the policyholder or held on behalf of third parties under contractual responsibility. A warehouse policy can cover the building structure, the stored inventory, and – where the warehouse handles third-party goods – the operator’s liability for goods in its custody.
What does it cover? Fire, flood, burglary, and stock damage to the warehouse structure and its contents, subject to policy terms; an extension can also cover unoccupied/vacant periods.
What assets can be insured? Warehouse structures, raw materials, finished goods, and third-party goods held under contractual responsibility.
Who typically needs it? Manufacturers, exporters, and logistics/warehousing businesses, particularly those with seasonal stock fluctuations or goods stored near coastal or flood-prone areas.
What is generally not covered? A warehouse operator storing its own goods needs standard stock/contents cover; a third-party logistics provider storing clients’ goods may additionally need a liability or bailee’s cover, since ownership and liability are distinct insurance questions.
Example: A textile exporter carries a factory and warehouse policy on its coastal warehouse, which stores finished goods awaiting shipment, and the policy includes cover for periods when the facility is unstaffed.
When should you consider it? Any business storing significant inventory – its own or a client’s – should review both the structural cover for the warehouse and the specific stock/liability cover appropriate to who owns the goods.
Property Insurance Against Burglary / Burglary Insurance
What is it? Burglary insurance covers loss of or damage to property resulting from burglary and housebreaking – theft accompanied by forcible and violent entry to, or exit from, the premises. This distinction matters significantly for claims: burglary insurance generally requires detectable evidence of forced or violent entry or exit (a broken lock, a forced window, a damaged door panel). If an intruder enters through an unlocked door or uses a key without violence, insurers typically classify this as theft, not burglary, and the base policy may not cover it unless the buyer has purchased a separate theft extension.
What does it cover? Loss or damage to insured property from burglary, subject to policy limits and sub-limits on high-value items.
What assets can be insured? Office and shop contents, business stock, household furniture and appliances, and cash kept in a locked safe (if specifically declared).
Who typically needs it? Retailers, shopkeepers, offices, warehouses, and homeowners wanting theft-specific cover for movable contents.
What is generally not covered? Loss from theft without evidence of forced entry (unless separately extended); gold, silver, and rare/valuable items unless specifically declared; wear and tear; loss from terrorism or war; loss of money from a safe opened using a key (unless obtained through violence); items in open spaces unless specifically listed; and internal theft by employees, staff, or business partners (usually requiring a separate fidelity/employee dishonesty cover). Most policies also require the policyholder to notify the insurer if the premises will remain unattended beyond a specified period (commonly five to seven consecutive days).
Example: Overnight, someone forces open a shop’s locked shutter and steals the stock; because there is visible evidence of forced entry, the policy covers the loss as burglary, subject to policy limits and any applicable sub-limits on high-value items.
When should you consider it? Burglary insurance is a practical addition for shops, offices, warehouses, and homes with valuable movable contents – but businesses should check whether they also need a theft extension (for non-forced entry) or a fidelity guarantee (for internal theft by staff), since standard burglary cover does not address either.
Art / Fine Art Insurance
What is it? Art insurance is a specialized policy for artwork, sculptures, antiques, rare books, musical instruments, and other valuable collectibles that do not fit well within standard depreciation-based property valuation.
What does it cover? Depending on the policy, art insurance typically covers theft, fire, accidental damage, and – where relevant – damage occurring during transit or while items are on exhibition or loan.
What assets can be insured? Paintings, sculptures, antique and period furniture, rare books, musical instruments, and other valuable collections held by private collectors, galleries, or dealers.
Who typically needs it? Art collectors, galleries, museums, and dealers in fine art or valuable collectibles.
What is generally not covered? Coverage varies according to the policy and valuation method – insurers may insure items on an agreed value basis (a fixed value the policy sets at inception, avoiding disputes at claim time) rather than the depreciated market-value basis they use for ordinary contents.
Example: A gallery insures a curated collection of paintings and sculptures on an agreed-value basis, so that in the event of fire or theft, the payout reflects the pre-agreed valuation rather than a depreciated estimate.
When should you consider it? Any time valuable collectibles exceed what a standard contents policy’s sub-limits would reasonably cover, a dedicated art policy with appropriate valuation terms is worth considering.
Which Properties Can Property Insurance Cover?
Insurability always depends on the policy, insurer, risk assessment, valuation, location, usage, and applicable terms – the categories below are illustrative, not exhaustive.
Buildings: Offices, factories, warehouses, shops, commercial buildings, schools, hospitals, hotels, and residential structures.
Plant & Machinery: Production machinery, electrical equipment, industrial equipment, generators, HVAC systems, and other business equipment.
Stock: Raw materials, work-in-progress, finished goods, trading stock, and general inventory.
Contents: Furniture, fixtures, computers, office equipment, and other business or household equipment.
Specialized Property: Artwork and valuable collections, project property and construction materials, and machinery under installation.
Property Insurance Decision Matrix by Asset Type
No single policy automatically covers every risk listed – combinations are often necessary.
| Asset / Situation | Main Risk | Suitable Policy / Coverage | Why |
|---|---|---|---|
| Commercial building (completed) | Fire, storm, structural damage | Fire/SFSP or Building Insurance | Protects the physical structure against named perils |
| Factory (operational) | Fire, machinery damage, stock loss | Factory & Industrial Property Insurance | Addresses structural, mechanical, and inventory exposure together |
| Warehouse with owned stock | Fire, flood, burglary, stock damage | Warehouse Property Insurance | Protects both premises and inventory |
| Warehouse storing third-party goods | Liability for client’s goods | Warehouse cover + bailee’s/liability extension | Reflects contractual responsibility, not just ownership |
| Office contents | Fire, theft, accidental damage | Contents Insurance | Protects movable business assets independent of the building |
| Rented residential unit (tenant) | Damage/theft of belongings | Contents Insurance | Tenants lack insurable interest in the structure |
| Machinery being installed | Installation, testing, assembly risk | Erection All Risk (EAR) | Designed specifically for the erection/commissioning phase |
| Machinery in normal operation | Fire, breakdown, accidental damage | SFSP or All-Risk (with breakdown rider) | EAR ends at handover; operational machinery needs a standard policy |
| Building under construction | Collapse, theft, weather damage | Contractor’s All Risk (CAR) | Purpose-built for construction-stage risk |
| Wide, varied risk exposure | Multiple unpredictable perils | All-Risk Property Insurance | Exclusion-based structure reduces uncovered-peril gaps |
| Artwork / valuable collection | Theft, fire, transit/exhibition damage | Art / Fine Art Insurance | Specialized valuation suited to non-standard assets |
| Shop or office against break-ins | Burglary (forced entry) | Burglary Insurance | Specifically addresses theft with evidence of forced entry |
| Business worried about internal theft | Employee dishonesty | Fidelity Guarantee/employee dishonesty extension | Burglary insurance excludes internal theft by staff |
Decision Tree: What Are You Trying to Insure?
- An existing, completed building → Fire/SFSP or Building Insurance (add Contents Insurance for what’s inside)
- Business contents (furniture, equipment, computers) → Contents Insurance
- Business stock/inventory → Stock insurance (fixed, declaration, or floater)
- Factory or industrial assets → Factory & Industrial Property Insurance (combination of sections)
- A warehouse and its stored goods → Warehouse Property Insurance (add liability/bailee’s cover if storing third-party goods)
- A construction project (civil works) → Contractor’s All Risk (CAR)
- Machinery undergoing installation or commissioning → Erection All Risk (EAR)
- Artwork or valuable collectibles → Art / Fine Art Insurance
- Concern about burglary/theft exposure → Burglary Insurance (check whether you also need a theft extension)
This is a simplified starting framework – many properties (e.g., a factory under expansion) require more than one policy type simultaneously.
How to Choose the Right Property Insurance Policy
Selecting the right cover requires weighing several factors together, since no single variable determines the correct policy on its own:
- Type of property – a finished structure, a project under construction, or machinery undergoing installation each needs a different policy category.
- Occupancy – owner-occupied, tenanted, or vacant premises affect both the right policy and required disclosures.
- Nature of business – a factory, a shop, and an office face different risk profiles even if similarly sized.
- Location – flood-prone, coastal, or seismic zones may need specific extensions (STFI, earthquake).
- Asset value and stock value – determine the sum insured and whether a floater or fixed stock policy suits fluctuating inventory better.
- Construction status – an active construction project needs CAR, not a standard building policy.
- Fire, theft/burglary, and machinery exposure – each may call for a different named cover or extension.
- Transit/exhibition exposure – relevant for valuable or mobile assets like art.
- Risk management controls – security systems, fire suppression, and site controls can affect premium and terms.
- Sum insured and deductibles – under-declaring value to reduce premium risks significant underinsurance at claim time.
- Policy exclusions and available extensions/add-ons – review carefully rather than assuming standard cover is comprehensive.
- Business interruption requirements – where a property loss would also halt income, a separate cover may be worth evaluating.
This guide does not recommend a particular insurer; evaluate the right combination of coverages against the specific risk profile of the property in question.
Comparing Common Property Policies
Fire/SFSP vs All-Risk Property Insurance
| Aspect | Fire/SFSP | All-Risk Property Insurance |
|---|---|---|
| Coverage logic | Named perils only – loss must match a listed peril | Exclusion-based – covered unless it matches an exclusion |
| Typical premium | Generally lower | Generally higher, given broader scope |
| Best for | Standard risk profiles, cost-conscious buyers | Businesses wanting fewer coverage gaps |
| Clarity of scope | Easier to know exactly what’s covered | Requires close reading of the exclusion list |
Building vs Contents Insurance
| Aspect | Building Insurance | Contents Insurance |
|---|---|---|
| What it protects | The physical structure | Movable items inside the structure |
| Who typically buys it | Property owner | Tenant, business, or owner (for belongings) |
| Insurable interest | Requires ownership/interest in the structure | Requires ownership of the contents |
Property Insurance vs Burglary Insurance
| Aspect | General Property Insurance | Burglary Insurance |
|---|---|---|
| Primary risk addressed | Fire, storm, and other listed/all-risk perils | Theft with evidence of forced/violent entry |
| Overlap | Typically does not automatically include burglary | Does not cover fire or storm damage; peril-specific |
| Relationship | Complementary – many businesses hold both | Complementary – often bought alongside a fire/office policy |
CAR vs EAR
Contractor’s All Risk (CAR) vs Erection All Risk (EAR)
| Aspect | Contractor’s All Risk (CAR) | Erection All Risk (EAR) |
|---|---|---|
| What it covers | Civil construction works (buildings, roads, bridges) | Machinery/plant during storage, assembly, and testing |
| Typical user | Contractors, developers | Companies installing plant/machinery |
| Coverage window | From site mobilization to project handover | From first machinery consignment to testing/handover |
Commercial vs Residential/Home Property Insurance
| Aspect | Commercial Property Insurance | Residential/Home Insurance |
|---|---|---|
| Typical assets | Offices, factories, warehouses, shops | Independent houses, apartments, villas |
| Common add-ons | Business interruption, employee dishonesty, public liability | Third-party injury liability, natural disaster extensions |
| Underwriting focus | Business operations and stock value | Personal belongings and family occupancy |
Common Exclusions and Limitations
No property insurance policy automatically covers every possible loss. The exact coverage and exclusions depend on the policy wording.
Commonly Covered Risks (subject to policy terms):
- Fire, lightning, and explosion
- Storm, cyclone, flood, and inundation (STFI, where included or added)
- Impact damage, riot, strike, and malicious damage
- Burglary with evidence of forced entry (under burglary cover)
- Broad accidental physical loss/damage (under all-risk structures, subject to exclusions)
Common Exclusions / Limitations:
- Wear and tear and gradual deterioration
- Intentional damage by the insured
- Certain consequential losses (unless specifically covered, e.g., via business interruption)
- Uninsured/unnamed perils under named-peril policies
- Underinsurance, where the declared sum insured is lower than the actual value
- Breach of policy conditions (e.g., failing to notify the insurer of prolonged vacancy)
- Deductibles – the policyholder’s share of every claim
- War, terrorism, and nuclear perils
- Mechanical/electrical breakdown under baseline all-risk policies (unless the buyer adds a specific rider)
How to Select the Right Property Insurance Policy
- Identify the asset (building, contents, machinery, stock, or specialized property)
- Identify the major risks the asset faces (fire, burglary, construction risk, installation risk, etc.)
- Determine the asset’s value accurately to avoid underinsurance
- Determine the required sum insured
- Identify the required policy type (or combination of types)
- Review the policy’s exclusions carefully
- Consider relevant extensions (earthquake, STFI, breakdown rider, theft extension, etc.)
- Evaluate deductible options and their effect on premium
- Check policy conditions (e.g., vacancy notification requirements)
- Review insurer-specific requirements and documentation
- Compare policy wording across insurers, not just premium
- Purchase the appropriate coverage, revisiting it as the asset or business changes
Frequently Asked Questions
Q) What are the types of Property Insurance?
The main types are Fire/SFSP, All-Risk Property Insurance, Building Insurance, Contents Insurance, Erection All Risk (EAR), Contractor’s All Risk (CAR), Factory & Industrial Property Insurance, Warehouse Insurance, Burglary Insurance, and Art/Fine Art Insurance. Insurers design each for a different asset type or stage of risk, and coverage depends on the specific policy wording.
Q) What is All-Risk Property Insurance?
All-Risk Property Insurance covers all physical loss or damage to insured property except perils specifically listed as exclusions, such as wear and tear, mechanical breakdown, and war/nuclear risks. It offers broader protection than named-peril policies but is not an unlimited guarantee – coverage always depends on the exclusion list in the policy.
Q) What is SFSP insurance?
SFSP (Standard Fire and Special Perils) insurance is a named-perils property policy covering listed risks such as fire, lightning, explosion, storm, flood, riot, and strike. Unlike all-risk cover, SFSP only pays for losses that match a peril explicitly named in the policy document.
Q) What does Property Insurance cover?
Coverage varies by policy type but generally includes physical loss or damage to insured buildings, machinery, stock, or contents from perils like fire, storm, and – depending on the policy – burglary or broader accidental damage. The exact scope always depends on whether the policy is named-peril or all-risk, and on any extensions the buyer selects.
Q) Which properties can property insurance cover?
Property insurance can cover buildings (offices, factories, warehouses, homes), plant and machinery, stock and inventory, business and household contents, and specialized property like artwork or construction materials, subject to insurer assessment, valuation, and policy terms.
Q) What is the difference between Fire Insurance and All-Risk Insurance?
Fire/SFSP insurance covers only perils specifically named in the policy, while All-Risk insurance covers all losses except those specifically excluded. All-Risk is broader in structure and typically costs more, but both require careful reading of the policy’s peril list or exclusion list.
Q) What is Burglary Insurance?
Burglary insurance covers property loss or damage from theft accompanied by evidence of forced or violent entry or exit. It typically excludes theft without forced entry (which may need a separate theft extension), internal theft by employees, and high-value items like gold or cash unless specifically declared.
Q) What is the difference between CAR and EAR?
Contractor’s All Risk (CAR) covers civil construction works – buildings, roads, bridges – while under construction. Erection All Risk (EAR) covers plant and machinery specifically during storage, assembly, installation, and testing. A single project involving both a new building and new machinery may need both policies.
Q) Does Property Insurance cover burglary?
Standard Fire/SFSP or all-risk property policies do not automatically include burglary cover as a default named peril in every case; buyers often purchase burglary cover as a standalone policy or an extension, and businesses should confirm whether their base property policy includes it or requires a separate purchase.
Q) Which Property Insurance is best for a factory?
A factory typically needs a combination: SFSP or All-Risk cover for the building and machinery, plus a stock insurance policy (fixed, declaration, or floater) for raw materials and finished goods, since a single policy rarely addresses all three exposures equally well.
Q) Which insurance covers warehouse stock?
A stock insurance policy – often structured as a floater policy for fluctuating inventory – typically covers warehouse stock, combined with the structural cover for the warehouse building itself; if the warehouse stores third-party goods, the policyholder may also need a liability or bailee’s extension.
Q) What insurance is suitable for machinery under installation?
Erection All Risk (EAR) covers machinery under installation and is specifically designed for the storage, assembly, and testing phase. Once the project commissions the machinery and hands it over, coverage needs to move to a standard operational property policy (SFSP or All-Risk).
