What’s Property Insurance?
The primary objective of buying any insurance is to relieve you from the financial burden in the event of a loss. Here, the insured agrees to pay an agreeable fee to the insurance company today in exchange for an assurance from the company that it will cater to the extreme but unforeseen loss in the future.
Property insurance is intended to protect you from loss or damage to costly personal property such as a house or a car.
Property insurance is grouped into homeowners’ insurance, auto insurance, flood insurance, and renter’s insurance.
Many homeowners are yet to understand the significance of insuring their expensive homes. Since they are bona fide owners of their property, they are entitled to live in their residence as long as they like to provide them with tax compliance.
As legal homeowners, they are free to do what they want with their homes, i.e., they can rent it out, auction it, and even leave it unoccupied. Bearing that in mind, many homeowners might ask themselves, “What is the need of having property insurance?” Then, unexpectedly, a massive tree in your backyard rams on your house and poses extreme damage.
Now you will be in financial distress to repair your home and replace all the damaged house items from your pocket. With property insurance, the company will step in to cater to home repair expenses in part or in full, exempting you from sudden and vast amounts of money.
Who is suited for property insurance?
Well, everyone in possession of a luxurious property. In many instances, grand property owners are required by law or mortgage agreement to insure their property. For example, in the United States, all drivers are obliged to carry auto insurance, generally in the form of liability insurance.
Liability insurance covers the damage and losses inflicted on the third party in the event of an accident. However, this excludes individuals culpable for the accident. Also, the liability insurance caters for car repairs and medical fees for any other passengers onboard.
Luckily, when you buy the needed liability coverage, you are also presented with the chance to purchase comprehensive property insurance to cover car damages that may occur in the event of an accident.
This will exempt you from financial troubles that are norm whenever an uninsured car is involved in an accident.
According to recent studies, many homeowners are unaware of what their homeowners’ insurance covers.
The 2007 New York Times survey revealed that 30% of homeowners thought that flood damage would be covered, 45% believed that damage resulting from a main water line break would be catered for, and 35% thought that mold damage is covered. In actuality, the following causes of property destruction are not covered under property insurance:
- Flood damage
- Maintenance damage
- Sewer backup2
According to the insurance policies, anything covered has to be sudden and accidental, meaning if a slow leak damages a house over time, it is not eligible for coverage. If your house suffers damage from leaking roofs and not from natural calamities such as storms, it won’t be covered.
The risks usually covered include volcanic eruption, windstorm, vandalism, smoke, civil commotion, damage attributed to aircraft or vehicles, etc.
Besides covering your property’s value, most insurance policies also encompass a vital provision for liability coverage.
Many homeowners are yet to understand the significance of this provision. Automobile owners are well-informed about this provision, unlike homeowners.
For instance, if you leave your gas cooker unattended and accidentally set your neighbor’s house on fire, you will be compelled to pay for the damages caused by fire.
The reason for paying monthly insurance premiums to the insurance company is to avoid financial troubles when the risk insured against occurs.
This also applies to someone who accidentally gets injured and requires medical treatment within your residence.
If you are on holiday and your property goes missing, you may be eligible for reimbursement. To kick start this process, collect tangible theft evidence and avail document proving ownership. Also, remember to avail police report to your insurance company.
It is critical to understand what your policy covers and what it doesn’t. Insurance companies charge reasonable premiums to cover the risks that might happen to your property.
Additional (Non) Coverage
Typically, property insurance doesn’t cover home-based businesses. This is where clients come to your home seeking your services. For instance, a homeowner can have a workshop where he repairs customers’ furniture.
To insure your businesses, you need to enroll for a commercial insurance policy. There are discrepancies in these rules as they tend to vary from one state to the other. Besides, if your property, particularly your house, is left unoccupied over a certain period, then the homeowner’s insurance policy may be revoked instantly by the insurer.
It is purported that an unoccupied house is more prone to risks such as fire and theft, and therefore, this enhances the prospects of risks, thus demanding a separate policy. Also, if you own another home or vacation property, you can obtain a different policy to cover your home as well. Some insurance companies offer desirable rates for their policies.
If the company is new and its rates are excellent, this should serve as a warning. Company reputation is one of the critical factors you need to consider when purchasing policies.
Before you buy a policy, take your time to understand what it covers and what it doesn’t. Also, use the property insurance calculator to calculate the actual amount you will be paying as a monthly premium. Also, it’s worth noting that property insurance cost varies from one policy to the other.
Home is the most expensive asset owned by most homeowners and for that reason, purchasing a property insurance cover is very important to cater to the unexpected. Property insurance comes with countless benefits to property owners. Keep in mind to buy insurance policies that reflect the value of your property.
Note that cheap insurance can be costly at the end since it partially covers the property. The type of property insurance policy suited for you will depend on the type of property you own. Purchasing the wrong policy is the worst mistake you can make as a property owner.