Getting the right insurance for your property may be confusing since there are so many choices in the market. However, comparing all the policies and picking a specific one requires expert help. Today, let us walk you through the kinds of property insurance to make an informed choice.
Types of Property Insurance
There are five basic kinds of property insurance that one can find in the market are:
- Homeowner’s Insurance: This is meant for those people who own a property and live in it. A homeowner’s insurance protects them against the damages or losses incurred due to theft, vandalism, or an act of God. Many financial institutions make it mandatory for funding borrowers to secure homeowners insurance against their property in case of any untoward incidents.
- Renter’s or Tenant’s Insurance: This type of insurance has the same benefits but is extended to the renter or tenant of a property. It can also protect the tenant’s personal belongings inside the property. A renter’s insurance can also be used to pay the homeowner for some unprecedented damages occurring during the tenure of the renter’s stay.
- Commercial Property Insurance: Meant for business owners and landlords of commercial spaces, this insurance protects the property owners, especially commercial property owners, against the losses faced due to a fire or other events in their establishment. Be it a home, warehouse, or office, fire insurances protect the assets inside the property and the structure.
- Natural Disaster Cover: This type of insurance is ideal for you if you’re looking for a way to make hurricane and storm insurance claims in a state prone to these natural calamities. Meant for homeowners and landlords of spaces, this insurance protects them against the liability of damage due to calamities like earthquakes, floods, hurricanes, storms, or lightning.
- Accidental Fire Insurance: If you’re an entrepreneur looking to protect an establishment specifically against the risk of fires, such as manufacturing or processing units, this type is the best choice. This insurance will cover all the bases with fire hazards and provide ideal coverage for the property and all the assets included.
How Does Property Insurance Work?
Events and hazards that are covered by property insurance generally comprise several afflictions of nature, including losses by fire, wind, smoke, lightning, hail, snow and ice, and others. Property insurance companies are bound to protect their policyholders against the risks of theft and vandalism by insuring their structure and its inclusions. The company will also provide such parties a liability coverage in the event that a third party other than the owner or renter gets injured on the property and wishes to sue.
Some property insurance coverage may exclude any damage as a result of events like floods, drain and sewer blockages, tsunamis, groundwater seepage, stagnant water, and several types of water-related damage. A property contracting mold is also not under the general coverage.
However, if one wishes to be protected against the loss of property or the items in it against non-inclusion, they can purchase policies that exclusively cover earthquakes, floods, wind-borne or wildfire disasters, as mentioned in section 1. These insurance covers as a whole or for specific conditions will protect property owners against the damages insured due to the occurrence of these events.
What Are The Inclusions Of Property Insurance Coverages?
There are three kinds of property insurance inclusions based on the coverage: Replacement cost cover, actual cash value cover, and extended replacement cost cover.
- Replacement cost cover: This kind of property insurance inclusion covers the cost of repairing or replacing any part of the entire property based on the same or an equal value. The coverage works by using the replacement cost value of the property items rather than their cash value.
- Actual cash value coverage: The insurance company will pay the property owner or its renter the cost of replacement after subtracting the depreciation value. If the item destroyed is six years old, the insurance holder will receive the price of a six-year-old item and not a new one.
- Extended replacement: The insurer will pay the insured a value more than the coverage limit in case the cost of construction goes up. However, this generally does not exceed 25 percent of the ceiling limit. When property owners or renters purchase insurance, the ceiling is the maximum benefit the insurance provider is willing to pay under the circumstance of damage.
Wrapping Up:
Now that you’ve understood the inclusions of each type of insurance, we hope you can secure your property in the best way possible
