Not to be confused with Homeowners Insurance, the purpose of Property Insurance is to protect the home structure from natural disasters (usually barring earthquakes and floods). If you own the property you live in, then property insurance is a must.
People often overlook this aspect of insurance because they believe that a Homeowners policy is enough, but that may not be the case. There are several, not so far-fetched instances where property insurance may have to come to your rescue. If a tree falls on your house, for instance. You would have to front up with the money for the repairs if you chose to reply on more or less any policy other than Property Insurance. If you do have property insurance then the insurance company may be able to help you out by covering parts of the repair, or the entire renovation, depending on your policy and coverage.
This is why a good, property policy can be a smart and necessary investment. In this blog, we explore everything you need to know about property insurance.
Coverage – what’s in and what’s not
There is a lot of misinformation floating around on what’s covered and what’s not when it comes to property insurance. A comprehensive survey conducted by the National Association of Insurance Commissioners stated that “One-third of homeowners believe flood damage will be covered by their standard policy. Over half think their policy covers them in the event of a water line break. Thirty-five percent say they will be compensated for an earthquake, and a slightly lesser proportion thinks mold is covered.”
In reality, property insurance may not cover flood damage, earthquake damage, mold, acts of war, and damage due to disrepair such as old electrical wiring, worn-out plumbing, and so on.
For more information on how you can properly dry your damaged property after a flood or from water damage in general, click here.
There are some complexities to consider regarding the kinds of accidents that are covered. For example, if a wooden post gets infested with termites and falls on your house, you may not get any relief from the insurance company. This is because this damage would be said to have occurred over months and may not be considered accidental damage. On the other hand, if a tree falls due to a hail storm or fire, you may get some relief. The point here is that policies are complex and have their own nuances. It’s important to review them thoroughly before signing up.
Scrutinize the liability coverage
Overlooking your liability coverage can sometimes prove to be a costly mistake. It’s not news that there are hundreds of lawyers in every American city in search of lawsuits they can file against people. Should you fall prey to such a situation, it’s Liability Insurance you may have to turn to, to bail you out of a sticky situation and compensate the aggrieved party. For instance, if your neighbor’s home catches fire due to sparks from your grill, you will likely have to pay for the damages. The same goes for injuries that occur on your property.
Liability coverage could save you from these situations.
Some other considerations
If you run a business from home, property insurance will not suffice to cover you. You will need a separate business policy to properly insure the area and its related liabilities. Another thing to keep in mind is that if your home is vacant for more than a specified period, your homeowner’s policy will most likely be canceled by the insurance company. This is, only fair, as vacant houses carry a higher risk of accidents.
A common blunder
One of the first things to check is if the policy covers repairs at actual cash value or the replacement cost. Replacement cost is generally preferable since that will cover you against the costs that you will actually incur. Check if it is possible to work that into your policy.
A floater is also a good add-on if you have expensive art or valuables within the property. This will compensate you in the event of loss or damage to such accessories.
When it comes to a property policy, the premiums will be decided by a complex combination of factors. Insurance companies may factor in nuggets like your owning an excitable large dog, having a pool in the backyard, or, even, whether you are a smoker. Insurance companies try to get a good picture of the risks they are assuming from these little details and then use their mathematical models to define premiums.
Of course, it is very important to be transparent while answering these questions. Not being forthright is risky. Your claims may even be rejected if you overlook something or don’t report something important.
Lastly, while hunting for the best property insurance policies, don’t let low premiums be the only deciding factor. If a rate is too good to be true, there’s probably something you’re missing. Do your research thoroughly before deciding on a policy. That could make all the difference in times of an emergency.