What is Property Insurance? Importance of overlooked necessity in Pakistan!

Insurance – a necessity that was ignored in Pakistan in the past. Living without insurance means driving a car without safety gear and with closed eyes. Property Insurance in Pakistan is one of the most neglected things. Many people even do not know what property insurance is and how it can provide safety to their investments.

Property insurance is a safety net against situations like accidents, fire, robberies, etc. Many insurance companies are working in Pakistan specializes in property insurance. If you are interested in buying properties in Pakistan and reluctant to insure them due to some unanswered doubts, worry not.

The guide here will provide you with information on Property insurance, its benefits and a few of the popular real estate insurance providers’ details. So let’s get started:

What is Property Insurance in Pakistan?

Property Insurance means a set of policies dedicated to protecting immovable properties and belongings while providing coverage for the liabilities as well. Property Insurance is a vast field, and it consists of rental property insurances.

Insurance of real estate covers many things like coverage against flood damage, maintenance damage, earthquake, vandalism, sewer backup, etc. The insurers are bound to cover the damages, which are the result of any thefts or crimes.

Without insurance, the buyers/investors expose their properties to all sorts of risks. Property insurance companies are massively mistrusted in Pakistan; with time, however, lots of properties insurance companies are entering Pakistan with innovative ideas and services.

To get a better idea of how real estate insurance works, one needs to know about financial protection provided by insurance companies in Pakistan.

Here is how insurance companies provide financial coverage to insured property owners:  
 

• Insurance companies usually use the actual cash value of the real estate to meet the costs of damages that are done to the property. According to the judicial rulings, the actual cash value is the cost to replace with new property of the same quality.
• Real estate insurance companies provide replacement costs for damaged properties. The cost paid is calculated on the comparable materials and quality of the properties used for a similar purpose. The replacement cost policy is only applicable if the property insurance that the buyer has bought offers you the facility to spend on the replacement and repair of the damaged property.
• There is also an extended replacement cost insurance coverage. The insurance helps to cover the cost associated with the rebuilding property outside the buyers’ control, and the insurance coverage limit is exceeded.

Status of Property insurance in Pakistan:

In Pakistan, as earlier said, property insurance is widely misunderstood by its customers. According to a survey conducted in Pakistan the real estate insurance is not more than 0.9% of GDP. If we compare the stats with other countries in the region, it clearly shows the lag in the industry.

In Pakistan, State Life Insurance Corporation is of the biggest insurance provider. It has insured around 50commercial buildings and plots in Pakistan.

Benefits of Property Insurance in Pakistan:

There are lots of benefits of property insurance in Pakistan, for instance;

Safety against thefts:

In Pakistan, law enforcement is not good in all areas, making the properties vulnerable to thefts and burglaries. While everyone makes an effort to avoid possible break-ins the theft is common in posh areas of the cities. Insurance can provide damage control in case of mishaps like thefts and vandalism.

Safety against Disasters:

Insurance gets more crucial in countries like Pakistan, where buildings and schemes are developed without planning, particularly for commercial real estate. We often hear news about fires in commercial plazas and properties, resulting in billions of investments.

The main reason behind it is the construction of buildings does not match the building bylaws. Therefore, commercial property owners are encouraged to ensure their properties against spontaneous disasters in metro cities.

Takaful & Transparency in real estate:

The insurance industry is going through significant changes in its size and products. In Pakistan, the major reason people are reluctant to get insurance is religious concerns. Now many companies offer Takaful window operations besides the traditional insurance. Takaful has gained popularity and has spread overall in the market. Increasing numbers of investors are now going towards property insurance.

The overall approval of insurance in real estate results in promoting transparency and financial strengths all over the real estate sector of Pakistan. Moreover, with the increasing regulatory and technological developments real estate industry is becoming more and more transparent.

Popular Property Insurance providers in Pakistan:

The property insurance industry is starting to get acknowledged by real estate investors. Here are a few institutes and banks from where you can get the best insurance plan for your property.

Jubilee Insurance:

Jubilee Insurance is one of Pakistan’s most reliable and oldest insurance providing companies. You can contact Jubilee Insurance for property insurance under ’Property All Risks’ & ’Fire & Allied Perils’

Contact Number: 0800-03786 

Email Address: info@jubileegeneral.com.pk 

Alfalah Bank Insurance:

The company aims to spread awareness about property insurance and expand the customers in the country with trust and reliability. Alfalah Bank is working on global standards and modern-day policies. 

Contact Number: 042-111-786-234

Email address: contactus@bankalfalah.com

IGI General Insurance:

Working in the insurance industry for years, IGI Insurance has maintained its standard to provide the best services to Pakistan. You can choose home insurance plans under Home Cover and Home content.

Contact Number: 021-111-308-308

Email Address: contact.center@igi.com.pk

That’s a wrap! A lack of real estate insurance in Pakistan has been a reason for the many distress for property owners. Real estate insurance has evolved in the country, and with increasing awareness, people are attracted to property insurance. It will prove beneficial for real estate investors as it offers safety, security and saving for a better future.

We hope that the guide has proved to answer your numerous property insurance-related questions. Feel Free to share your feedback or send a query at info@reall.pk. Visit Reall.Pk listings for the latest properties to invest in throughout Pakistan.  Stay tuned to Reall.Pk blog page for latest news and information on real estate.