What is property insurance? 5+ things to know when choosing to buy

1. What is property insurance? Characteristics of property insurance

Property insurance is a type of insurance that helps protect personal or business assets against unwanted risks such as fire, natural disasters, theft, collision, or other risks leading to loss or damage to property. When the events described in the insurance contract occur, the insured will receive compensation from the insurance company, helping to reduce financial losses.

Outstanding features of property insurance:

• Property ownership: The insurance buyer needs to prove ownership of the insured property.
• Compensation contract: A property insurance contract is a type of contract of indemnity nature, only paying within the actual damage value of the insured property.

2. Why do you need property insurance?

Property insurance is a safe financial solution that protects you and your family, becoming an indispensable choice to ensure safety and stability in life.

Benefits when you own property insurance:

• Peace of mind against all risks: No one can predict the unexpected, but property insurance helps you always have peace of mind, even when facing any incidents such as natural disasters, collisions, or theft.
• Effective cost savings: With a small insurance premium, you will avoid a large financial burden when something goes wrong. The insurance company will compensate for the damage, helping you minimize the cost of repairing or replacing the damaged property.
• Compliance with the law: Some areas require mandatory property insurance according to regulations. Owning insurance not only protects your assets but also helps comply with the law and avoid unnecessary problems.

3. Some popular types of property insurance

Currently, according to the law, citizens have the right to buy and sell the following types of insurance:

• Compulsory fire and explosion insurance: This type of insurance applies to organizations and businesses with high risk of fire and explosion. This is a legal requirement to ensure compensation when damage caused by fire and explosion occurs.
• Fire insurance and special risks: Provides broader insurance coverage, not only protecting assets against fire but also against incidents such as explosions, floods, or lightning strikes. This is the optimal choice for those who want to expand insurance benefits.
• Fire insurance for private homes: Exclusively for households, this type of insurance protects the home and assets inside against the risk of fire or other unexpected losses.
• Business interruption insurance: Support businesses to compensate for loss of revenue or operating costs during periods of disruption due to incidents that damage business assets.
• Office all-risk insurance: Comprehensive protection for equipment, documents, and assets in the office against risks such as damage, theft, or natural disasters.
• Other types of insurance: In addition to the above insurance packages, you can also consider vehicle insurance, warehouse insurance, or machinery and equipment insurance, depending on your specific asset protection needs.

4. Types of assets that can be insured

Property insurance is applicable to the following subjects:

• Housing: Insurance for housing types such as individual houses, villas, apartments and auxiliary buildings.
• Interior: Ensuring safety for household appliances, electronic devices, and high-end furniture and valuable personal items.
• Vehicle: Insurance for cars, motorbikes and personal vehicles against the risk of damage or loss.
• Goods: Protect business goods, goods in storage or in transit, as well as valuable personal property.
• Money and valuable papers: Insured objects include cash, securities, savings books and important financial documents.

Owning property insurance not only protects your material value but also helps you feel more secure against unexpected risks.

5. Regulations on buying and selling property insurance

5.1. Principles of compensation in property insurance

Compensation principles in property insurance are specified in detail at Article 46 of the Law on Insurance Business 2000, amended and supplemented in 2010. This is the legal basis to ensure the rights of insurance buyers and the responsibilities of insurance enterprises.

Main principles:

• Based on the market value of the asset: The amount of compensation is determined according to the market value of the property at the time and place of the loss, and is based on the actual level of damage. If the contract has other agreements, these terms will apply.
• Do not exceed the insurance amount: The maximum compensation amount must not exceed the insurance amount agreed in the contract, unless there are special provisions clearly stated.
• Reasonable cost: The insurance company will pay necessary and reasonable costs arising from:
  • Preventing and limiting losses.
  • Follow instructions from the insurance company.
• Requirements for proof of ownership: The insurance buyer must provide evidence to verify ownership of the insured property to ensure transparency and legality.

5.2. Common forms of property insurance compensation

Insurance companies often apply many forms of compensation to ensure the rights of the insured. Below are common forms of compensation:

• Repair damaged property: The insurance company is responsible for paying repair costs to restore the property to its original state before the incident occurred.
• Replace the asset with another asset: In case the property is damaged beyond repair, the insurance company will replace it with property of equal value and function.
• Pay compensation: The insured person receives a compensation amount corresponding to the value of the damage, as agreed in the insurance contract.

5.3. In case property is not insured

Not all risks are covered by insurance. If your incident or damage falls into the following cases, the insurance company may refuse compensation according to current insurance regulations and laws:

• Damage due to intentional error: Any losses caused by intentional acts of the insured or related parties will not be compensated.
• Damage outside the scope of the contract: Risks that are not mentioned or excluded in the insurance contract will not be covered.
• Failure to comply with insurance regulations: In case of non-compliance with the terms and conditions committed in the contract.
• Illegal assets: Insurance does not cover property without legal documents or in violation of the law.
• Damage due to maintenance errors: Loss due to failure to properly maintain and maintain the property or allowing the property to deteriorate.
• Incidents caused by illegal acts: Any loss arising from the insured's violation of law will be excluded.

5.4. Cost of purchasing property insurance

The cost of purchasing property insurance depends on many factors, including insurance face value, probability of risk occurring and accompanying insurance benefits. Depending on the value of the property being insured and the type of insurance, fees vary.

One-time insurance fee
For customers who choose to pay a one-time premium, the insurance premium will be paid in full annually. For example, the insurance premium for a house worth 1 billion VND can range from 1,5 - 3 million VND per year depending on the type of insurance and risk factors.

Periodic insurance premium
Insurance companies offer monthly, quarterly or semi-annual premium payment methods. With this form, insurance participants can flexibly pay. For example, the insurance fee for a property worth 500 million VND could be 150,000 - 300,000 VND/month depending on the scope of protection.

This fee will vary based on the value of the property, type of insurance (fire and explosion insurance, all-risk insurance...) and other specific factors such as location or property condition.

5.5. Term of property insurance

Property insurance usually has a short term, commonly one year. This is the standard time to evaluate and protect assets against unexpected risks. After expiration, insurance companies will require customers to renew the contract to continue being protected.
Insurance companies often create favorable conditions for customers to renew insurance contracts in the following year. This helps save time, limit complicated procedures and ensure continuous benefits for insurance participants.

Property insurance contracts often have a short period of time, so insurance participants need to pay attention to renewing them on time so as not to interrupt their property protection benefits.

6. Notes to buy effective property insurance

To buy effective property insurance and optimally protect your assets, you need to keep in mind the following important factors:

• Determine the value and type of assets to be insured: Before buying insurance, you need to properly evaluate the value of your assets and clearly determine the type of assets you need to protect (house, vehicle, furniture, etc.)) to choose the appropriate insurance package.
• Choose an insurance package that suits your needs and financial ability: Choose an insurance package that fully meets your property protection requirements, but is also suitable for your financial capabilities. Don't forget to consider additional benefits and premiums.
• Research and compare reputable insurance companies: Research and compare reputable insurance companies, evaluate their reliability and service quality, including reviews from previous customers.
• Read the policy terms carefully, including coverage and exclusions: Before signing the contract, you need to carefully read all insurance terms, especially the scope of protection and cases not covered (exclusions). This helps avoid misunderstandings later.
• Check the compensation policy and processing time when an incident occurs: Find out about the insurance company's compensation policy, including compensation processing time and necessary procedures when an incident occurs.
• Make sure to provide complete and accurate information when signing the contract: Provide accurate and complete information when signing an insurance contract to avoid insurance being canceled or invalidated when an incident occurs.
• Pay insurance premiums on time to maintain contract validity: Make sure to pay insurance premiums on time according to the contract to avoid the contract being interrupted or invalidated, losing property protection benefits.

7. Some frequently asked questions about property insurance

1. Is property insurance mandatory?
Depending on the type of property and legal regulations, some types of property insurance are mandatory, such as mandatory fire and explosion insurance for construction projects or vehicles. However, for personal assets such as houses and furniture, property insurance is usually voluntary.

2. How to get compensation quickly?
To receive compensation quickly, you need to promptly notify the insurance company as soon as the incident occurs, provide all necessary documents and information, and comply with the compensation claim procedures according to the insurance company's regulations.

3. How long does it take to process a claim?
Claim processing time depends on the type of insurance and the level of damage. Normally, the insurance company will process within 7 to 30 days from receipt of complete compensation documents.

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