Property Insurance: Description Of Property Insurance

When you decide to buy a property, you want to protect it from being destroyed by weather, fire, the passage of time, and other events. If your property does fall victim to severe damage, you will want to be financially able to have it repaired or replaced.

Property insurance comes as part of an insurance package. Homeowners, condominium owners, mobile homeowners, landlords, renters, business owners, home business owners, and vehicle owners all have insurance packages that include property insurance.

For individuals, expensive personal property or items with sentimental value such as wedding rings and other jewelry, clothing, art, collections, furniture, electronics and vehicles, are evaluated and inventoried very carefully. This is to ensure you receive a fair replacement or repair value in the event they are lost or damaged. Property insurance covers everything on your property, including:

  • All aspects of the house and/or vehicles.
  • Any attached or detached structures, such as a garage or porch.
  • All contents of the house and/or vehicles.

Property insurance for businesses covers you either on a specific loss basis or a general basis. You can purchase a policy that specifies the perils you are insured for or a general coverage for the most common causes of property damage. Unless your industry or location has a high risk of specific dangers, you are better off to purchase general coverage. You can always add certain perils to the general policy if needed. Business owners have property insurance to financially protect themselves from the cost of repairing or replacing business property, including:

  • Buildings, whether they own or rent their place of business.
  • Vehicles used for business purposes.
  • Stock, machinery, office furniture and computers.
Property Insurance: Description Of Property Insurance

Individuals and business owners must carry a very detailed inventory of their property. This includes a list of the items, appraisals if available, receipts and all possible historical documentation, serial numbers and vehicle identification numbers (VIN) where available, and photographs of the items. This documentation should be duplicated and stored safely off-premises in a bank safety deposit box or in a fire and damage resistant safe in another location.

A property insurance indemnity can come in one of two forms:

  1. Actual cash value, which means the value of your property minus depreciation.
  2. Replacement cost, which means the value of replacing your property with a brand new version. This type of indemnity has a higher premium.

Property insurance will help you bring your property back to good as new.

Property Insurance: What Does Property Insurance Cover?

Property damage can be an unexpected financial catastrophe if your do not have property insurance. If your property is valuable to you, you need to financially protect yourself from the costs of repair or replacement.

Homeowners and business owners have many similarities when it comes to property and the damages it can sustain; and thus, their property insurance policies have some of the same damage coverage.

Nature can wreak havoc on one’s property. Property insurance providers understand this and will cover you for most of what it can throw your way, including:

  • Lightning and wind.
  • Damage caused by hail and sleet, the weight of snow and ice, as well as frozen pipes.
  • Fallen trees and other objects.
  • Volcanic debris.

Earthquake and flood insurance coverage are commonly separate items, and most property insurance policies do not include coverage for these events. Earthquake and flood insurance is mostly available from and regulated by government bodies and you will need to construct your building and secure your property according to the building codes provided by your government agency. You may also need separate coverage if you live in a high-risk zone for tornadoes, hurricanes, hail, lightning and wildfires. To learn more about coverage for these events, contact:

Property Insurance: What Does Property Insurance Cover?
  • National Flood Insurance Program (NFIP).
  • Federal Emergency Management Agency (FEMA).
  • Wind Pool Association.
  • Your state can provide you insurance information and the requirements for your area.

Damage caused by fire and smoke due to lightning, as well as an electrical fire or any other unintentional damage will be covered. Repairs and even the complete replacement of your home or business and its contents can be paid for by your property insurance policy.

Social problems can result in your property sustaining damage. Property insurance will cover you for damages and losses incurred by theft, vandalism or a riot.

Other contingencies that occur are also covered by your property insurance, including:

  • A falling aircraft or an out-of-control vehicle.
  • A baseball or any other of the many reasons for broken glass.
  • Damages to and from plumbing, air conditioning and electrical systems and all household appliances.

Whether your property is your home or your business, make sure you are financially covered for any damages the world may want to inflict.

Property Insurance: Rates For Property Insurance

The repair costs for your home after it has been severely damaged can be traumatizing. Property insurance is an affordable way to cover damages.

Your premium is based on an evaluation of your home or business and the risk level of possible damage your property may sustain.

Items that will affect your home’s property insurance premium include:

  • If you live in the vicinity of a fire hydrant or fire station.
  • If you have smoke detectors and a burglar alarm.
  • If you live in a high crime area.
  • The age of your house, the wiring and the plumbing.

Considerations for a business’s property insurance premiums include:

  • What is your industry? A restaurant is a higher risk than an insurance office.
  • Where do you do business?
  • What are the construction materials of your building? Brick has a high fire resistance.
  • Are there nearby risks to your property? Is the business next door to a fireworks factory?

Once this data is gathered, it is given a risk rating. This rating, in conjunction with the value of your property and contents, will calculate the amount of coverage you need and the cost of your premium. Of course, the lower the risk rating, the lower your premiums will be. You can also lower your premium by raising your deductible, just be sure it is something you can afford.

Property insurance rates have been increasing lately and there have been some educated guesses at the reasons behind insurance companies making this decision. Rates may be rising because:

  1. The increased cost of building materials makes repairs more expensive.
  2. The rise in gas prices makes it more expensive to ship materials and labor to the job site.
  3. The increasing number of natural disasters in the U.S. has increased the level of risk insurance companies have to take to insure their clients.

The average homeowner’s insurance, which includes property insurance, is approximately $800 per year. Compare this against the repair costs of your property and the replacement costs of your home’s contents. Let’s not forget this price includes your liability and other coverage as well. $800 per year is still much more affordable.

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