Property Insurance in Kazakhstan

Property insurance in Kazakhstan

Property can be the result of many years of a family's investment or the basis of a company's operations. Fire, flooding, an earthquake, theft or equipment breakdown can cause significant financial loss, so a policy should be chosen according to the real characteristics of the asset.

What property can be insured

In the contract, property is described so that it can be identified: address, purpose, characteristics, inventory number, area, value and other details. A general wording without a list can lead to a dispute.

Voluntary form and legal regulation

Most property insurance contracts are concluded voluntarily. That does not mean they are "not regulated by law." Civil legislation, the Law of the Republic of Kazakhstan "On Insurance Activity", the insurer's rules and the individual terms of the policy all apply.

Old information about the compulsory insurance of citizens' real estate that was under development should no longer be treated as a current requirement. Before concluding a contract, check the current rules, not drafts from past years.

Main risks

Depending on the programme, the following may be covered:

• fire, lightning strike and explosion, including household gas;
• natural events: storm, hurricane, hail, snow load, flood;
• earthquake — if it is included and not excluded by a separate condition;
• water damage from plumbing, heating, sewage and fire-fighting systems;
• impact by a vehicle;
• falling aircraft, their parts or cargo;
• unlawful acts of third parties;
• burglary, robbery or armed robbery as defined in the contract;
• breakage of glass, doors, shop windows and gates;
• breakdown of machinery and equipment — where the relevant section is included;
• terrorism and political risks — only when specially included.

Not all events are part of the standard package. Earthquake, theft, equipment breakdown and terrorism often require separate agreement.

What is usually excluded

• intentional acts of the policyholder or beneficiary;
• wear and tear, corrosion, mould and gradual deterioration;
• defects known before the contract was concluded;
• design or construction errors to the extent excluded;
• downtime and loss of income without separate cover;
• theft without the features required by the contract;
• property not included in the list or located outside the territory;
• war, nuclear effects and other special exclusions;
• breach of mandatory safety measures, if it is connected with the loss.

How to determine the sum insured

The sum insured must reflect the chosen valuation basis: the reinstatement value of the building, market value, book value or the replacement cost of equipment. These concepts must not be mixed up.

For an apartment, you can separately indicate the structure, finishes, furniture, appliances and liability to neighbours. For a business — buildings, equipment, stock and reinstatement costs.

Deductible

A deductible is the part of the loss that remains with the policyholder. A zero deductible raises the cost of the policy, while a reasonable fixed amount helps exclude minor losses.

Different deductibles may apply to different risks: a separate one for earthquake, water, theft or equipment breakdown. Compare offers on identical parameters.

Earthquakes and seismic zones

For Almaty and other seismically active regions, it is especially important to check whether earthquake is included. Sometimes this risk is absent from the basic package, carries a higher deductible or requires information about the structure and year of construction.

The insurer may request a technical passport, information on any strengthening of the building, the condition of the property and previous damage. Inaccurate information complicates settlement of a claim.

Liability to third parties

An apartment owner can supplement the policy with liability to neighbours in the event of flooding or fire. A business may need the premises owner's liability to visitors, tenants and owners of neighbouring property.

This is a separate subject of insurance with its own limit, exclusions and deductible. Cover for your own property does not mean automatic protection of liability.

Business interruption

Business interruption insurance can compensate for loss of gross profit and some fixed costs after a covered property event. It is especially important for factories, warehouses, shopping centres, restaurants and hotels.

The payment usually depends on whether the underlying material damage is recognized as insured. The indemnity period, financial indicators, waiting period and calculation method need to be agreed.

Equipment breakdown

An ordinary property policy does not always cover internal mechanical or electrical breakdown. A separate programme may be required for machine tools, refrigeration units, boilers, transformers and production lines.

Wear and tear and routine maintenance costs are usually not insured. It is important to keep maintenance logs and follow the manufacturer's recommendations.

Insurance of stock and goods

The value of stock changes during the year. For a warehouse, it is useful to agree the maximum balance, seasonal peaks, reporting and automatic reinstatement of the sum insured after a payment.

Storage conditions, temperature regime, fire safety, security and record-keeping are checked separately. Goods with a limited shelf life require a special approach.

Leased property

A tenant does not always answer for the whole building, but may have its own fit-out, equipment, goods and contractual liability to the owner. The landlord insures the structure and its own assets.

It is useful for the parties to agree who takes out the policy, who is the beneficiary and how obligations are allocated after an event.

What affects the cost

• the purpose, value and condition of the asset;
• the materials of walls, floors and roof;
• fire alarm, security and water supply;
• seismicity, floods and other natural factors;
• the nature of production and the presence of hazardous processes;
• loss history;
• the set of risks, limits and deductibles;
• storage conditions and neighbouring facilities;
• the insurance term and the chosen valuation.

There is no universal range of rates. A correct price is formed after the risk has been studied, and a large facility may require an inspection or an engineering report.

Documents for arranging cover

• a questionnaire and information on the policyholder;
• title documents or a lease agreement;
• technical passport, plans and photographs;
• a list of property with valuation;
• financial data on stock and business interruption;
• information on fire and physical protection;
• loss history and previous contracts;
• additional documents at the underwriter's request.

What to do when an event occurs

1. Ensure safety and call the emergency services.
2. Limit further damage by reasonable measures.
3. Notify the insurer within the deadline and in the manner set by the contract.
4. Record the damage with photos, video, reports and documents from the competent authorities.
5. Do not throw away property before inspection, if it is safe to keep it.
6. Keep a record of expenses and agree the reinstatement.

In case of theft, contact the police; in case of fire, the fire service; in case of a utility accident, the service organization. The list of required confirmations depends on the event.

What to pay attention to before signing

• the full list of property and addresses;
• the definitions of insured events;
• exclusions and special clauses;
• the sum insured and the underinsurance rule;
• deductibles for each risk;
• limits on costs and liability;
• the notification period and documents;
• the method of assessing damage and wear;
• reinstatement of the sum after a payment;
• the obligation to report changes in risk.

This material is for information purposes only. The final cover is determined by the contract and the rules of the chosen insurance company.