Property insurance across borders: Local firms better equipped to provide tailor-made policies

Why property insurance is crucial

Property insurance plays a crucial role in protecting individuals and businesses against potential risks and losses associated with their properties. It offers coverage for various types of properties, ranging from residential homes to commercial establishments, safeguarding against perils like fire, theft, natural disasters, and more.

However, when it comes to insuring properties in diverse locations such as Mumbai, Bengaluru, Dubai, and Ontario, it becomes evident that a single policy from India cannot adequately address the unique risks and regulatory frameworks associated with each region.

Also read: How to file insurance claims for your damaged cars

Firstly, the geographical and climatic variations between these locations contribute to differing risk profiles. Mumbai, for instance, is prone to cyclones and flooding due to its coastal location. Bengaluru, on the other hand, generally experiences milder climate conditions but is susceptible to water scarcity and occasional hailstorms.

In contrast, Dubai faces extreme heat, sandstorms, and the potential risks associated with rapid urbanisation. Ontario, located in Canada, is subject to harsh winters, snowstorms, and freezing temperatures. Such variations require tailored insurance coverage to address the specific risks prevalent in each area.

Unique nature of property insurance

Unlike health insurance policies that often offer a floater concept, property insurance is issued for a specific property. Each property possesses its own distinct characteristics, including the area, geography, and associated risks.

Therefore, it is not possible to combine multiple properties under a single property insurance policy in India. This is because the risks and requirements associated with each property differ significantly, necessitating the issuance of separate policies.

Also read: Moneycontrol-SecureNow Health Insurance Ratings: How to choose the right health policy

Limitations of geographical coverage

An Indian non-life insurance company holds a licence that restricts its operations to providing property insurance coverage solely for properties situated within the geographical boundaries of India. Consequently, properties located in Dubai or Ontario cannot be insured by this Indian insurer, as they lack authorisation to issue policies for locations outside India.

Each jurisdiction has its own unique legal and regulatory frameworks governing property insurance. Thus, insurance policies must adhere to the local laws and regulations of the respective regions.

For instance, Mumbai and Bengaluru operate under the jurisdiction of Indian laws, while Dubai follows the regulations established by the United Arab Emirates (UAE), and Ontario abides by Canadian regulations. These regional variations make it impractical to have a single policy originating from India that can effectively meet the legal requirements and nuances of all these regions.

Sourcing coverage from local markets

To ensure adequate coverage for properties in geographies like London, Dubai or Ontario, it is necessary to source insurance from the respective local markets.

Local insurance providers in these regions are equipped with the knowledge and expertise to assess the specific risks associated with properties in their areas. They possess a comprehensive understanding of local regulations, construction practices, and environmental factors that affect insurance coverage and premium calculations.

Why separate policies are essential

By issuing separate policies for each property, insurers can tailor coverage based on the unique risk profiles of individual properties. This allows for precise evaluation of risk factors and appropriate premium calculations. Additionally, it ensures that claims and compensation processes are streamlined, as each property is treated separately in the event of a loss or damage.

Benefits of local market coverage

Obtaining property insurance coverage from local markets has several advantages. Firstly, local insurers possess an in-depth understanding of the regional risks and can offer specialised coverage to mitigate these risks effectively. They also have established relationships with local service providers, facilitating prompt claim settlement and efficient restoration processes.

Moreover, local insurers are well-versed in the legal and regulatory frameworks governing insurance in their respective regions. This ensures compliance with local laws and regulations, providing policyholders with added confidence and security.

Property insurance plays a vital role in safeguarding our assets from unexpected events. However, it is important to recognise the limitations of property insurance policies, particularly in terms of geographical coverage. Understanding that separate policies are necessary for each property and seeking coverage from local markets for properties located outside India is crucial.

By adhering to these principles, policyholders can ensure comprehensive coverage that aligns with the unique characteristics and risks associated with their properties, thereby providing them with peace of mind and financial security.