What Is Property Insurance?
Property insurance covers loss in the event that damage, injury, or death occurs and the person who owns the property that caused or was involved in the event is liable for the cost of the loss. Today this type of insurance is usually bundled with liability, or casualty, coverage, which insures the loss incurred by a third party that is caused by the property or property owner.
- Most property and casualty insurance sold in the United States are automobile and homeowners’ policies.
- Automobile (also motorcycle, boat, and recreational vehicle) policies cover damages incurred when the policyholder is involved in a motor vehicle accident or injures a pedestrian with the vehicle.
- Homeowners insurance covers property loss occurring because of fire, weather, burglary, or injury to a third party in the home.
- Renters can purchase renters’ insurance to cover loss or damage to their belongings and living expenses while the home is being repaired, if the loss is due to one of the listed perils in the contract.
Homeowners’ and renters’ insurance often also cover a policyholder’s belongings when traveling or riding in a vehicle as well as personal liability, but may be covered only with a rider or endorsement. Property insurance riders can also be purchased to cover specific or expensive items, such as jewelry, electronic equipment, or antiques. Some areas of the country also sell policies or riders that cover losses occurring because of flood or earthquake — events usually considered “acts of God” and typically excluded from most policies.
- Other types of property and casualty insurance include business interruption insurance and extra expense insurance.
- People who own or operate businesses with staff and own or rent business property can purchase any number of property and casualty insurance policies to limit any and alSl risks to the business and the property.
Celebrities, musicians, and well-paid athletes often purchase special property insurance to insure their bodies or the parts of their bodies that generate their incomes. These are very specialized policies and sold by only a few carriers. An early example of this type of specialized property insurance policy was during World War II when Betty Grable famously insured her legs against damage or disfigurement.
A quote for property insurance is a "guesstimate" of the cost to
insure a property (business or item), with a summary of the
benefits, limits, and details of the policy. It is not a contract
for insurance, and quotes are not guaranteed to be the same as the
actual policy or premium until all underwriting that the agent and
carrier deem necessary on both the item and purchaser is completed.
To obtain a quote, the agent will need to know the location and
description of the item or business to be insured, the age of the
item, the type of construction or model, and a general scope of the
policy (i.e., both collision and liability for an auto; or fire,
theft, and windstorm damage coverage for a building). The agent may
ask any number of other questions relating to the insurability
and/or risk of the purchaser and the item, to accurately assess the
premium and offer you the best policy for your item and your
budget. The quote is the start of a contractual relationship
between the purchaser and the carrier, with the agent as the
facilitator, or salesperson.
Property Insurance Companies
A purchaser of property insurance has many options regarding carrier and agent or agency, and should solicit quotes from as many of these carriers and agents as possible.
Insurance companies can be large multinational carriers with huge reserves, or smaller and independently owned, or divisions of a larger conglomerate. Carriers are either stock companies, traded on Wall Street, or mutual companies owned by their policyholders, both of which pay dividends, in good years, back to either stock owners or policy owners.
Some carriers sell policies only through a captive agency force, agents who are employees of the carrier or who own and operate franchised agencies of the company. Captive agents can only quote and sell policies of the company to which they belong and, sometimes, policies of selected carriers with which the carrier company has made contractual arrangements to sell. Carriers that do not have a captive agency force sell policies through selected and contracted independent agents who agree to represent, sell, and service customers for the carrier. Independent agents can quote and sell policies of any carriers who allow the agent to represent them. These agents usually have selling requirements and maintain a certain amount of business with each carrier. If the independent agent doesn't sell the requisite amount of premiums and/or policies, he or she may lose the contract to sell the carrier's insurance. Both independent and captive agents, while earning commissions for sales, have responsibilities to their carrier partners to ethically and honestly represent prospects and their risks.
When comparing policies and premiums, it's a good idea to
solicit quotes from many different sources since each property
insurance agent is limited to few carriers. It is also important to
find a policy that not only fits your budget but also meets your
needs. Many captive auto, life, and home agents offer excellent
policies for the average home and auto owner, but may not have
various options for the business owner, since these agent's key
markets are auto, life, and home insurance sales. Conversely, the
business owner who needs special policies and details in his or her
property insurance portfolio may not find many options with an
auto, life, and home franchise agency. An independent agent who
specializes in custom-designed business policies, and who can
access a number of carriers and their options, may be better suited
for business insurance needs.
Property Insurance Directory