Property Insurance in China
For business owners, physical assets are not just the physical property they own. In some ways, they can also be considered as financial assets. From their use and operation, revenue can be generated, and opportunities gained.
We will make a brief presentation of property insurance available in China.
What does property insurance cover?
It covers the property, physical assets belonging to the insured party, including those in their care and custody such as property leased.
The properties covered are fixture, fittings, improvements made by the tenant, furniture, machinery, equipments, inventories.
Some properties are excluded from insurance policies. The list of exclusions is usually at the beginning of the policy under the section “property insured”. In principle, any property listed in the exclusions can be covered by being declared to insurer and through the addition of an extension clause to the policy. Some properties like animals and agricultural crops are traditionally covered under insurance policies pertaining to agricultural activities.
How can we protect property?
It can be done by purchasing an insurance policy which aims to protect properties owned or in custody.
There are two common forms of property insurance: “property all risks” and “named perils” policy. Under “named perils”, only perils listed in the policy are covered. Under “property all risks”, there is no list of what is covered, only a list of events excluded for which insurer will no provide indemnification.
In China, property all risks is more popular.
The definition of the scope of coverage of property all risks insurance is: “the Insurer shall indemnify the Insured for direct physical loss of or damage to the property insured…caused by any Natural Hazard or Accident …”.
“Natural Hazard” refers to natural catastrophes such as typhoon, floods, thunderstorm, etc.
“Accident” refers to unforeseen or uncontrollable events which leads to material damage.
There is a list of exclusions detailing perils for which insurers do not provide cover. Some of it can be carved back with a relevant extension clause, while others cannot (for instance, damage caused by willful act, war, nuclear radiation, etc.)
When purchasing property insurance, it is paramount to know what kind of property we own and to assess accidents that may occur to ensure that, if things go wrong, we will be safe.