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What is Property Insurance?

Property insurance is a policy that provides financial reimbursement to the owner/renter of a structure and its contents, in the event of damage or theft. Property insurance can include homeowner’s insurance, renter’s insurance, flood insurance and earthquake insurance. When purchasing a property, an individual will be required to have property insurance on the house and/or property. Property insurance provides protection from fire, theft, and water damage. There are also specialized forms of property insurance which include;

  • Fire Insurance
  • Flood Insurance
  • Earthquake Insurance
  • Home Insurance
  • Boiler Insurance

If you live in an area where any of these or common such as a flood or earthquake zone it would be recommended to get a policy that covers such events. Property is insured in two ways,

Open perils - Open perils cover all causes of loss not named specifically excluded in the policy. Exclusions on an open perils policy would be damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism, and war.

Named perils -Policy covers anything named specifically in the policy. Damage causing events such as fire, lightning, explosion, and theft are all common claims in a named peril policy.

Property Insurance Laws

There are federal and state regulations on how much an insurance company can charge for property insurance. The laws are going to vary from state to state on what they can charge. The requirements however are very loose and depend on the type of coverage the property owner is requesting. Factors such as location, choice of deductibles, discount policies, the amount of coverage purchased, local fire protection, and the age of construction of the home are all taking into consideration when purchasing property insurance. Property owners can request to insure the home for more than the value of the property however these policies are going to cost more.

When preparing a policy for a homeowner that insurance company will send a field inspector out to do an inspection of the home. An agreement is usually part of the application process for the field inspector to be on the property. However, if there is not an agreement as part of the application process if could be an act of trespassing for the field inspector to be on the property.

Business Property Insurance

Business property insurance also known as commercial property insurance can protect your property, inventory, or assets against loss or damage caused by theft, an accident, or a natural disaster. The policy will cover to replace or repair the damaged property whether at the business or away from the business. If you don’t own the building in which the business is located, the only thing that would need covered is the contents. On top of the policy covering the assets it would also cover fixtures, furniture, and office supplies within the building. Premiums are based on the type of policy. There are two types of policies for business property insurance; cover replacement cost and actual cash value. Cover replacement cost ensures that the business would be covered to replace items at current prices. Cash value would replace items or property at depreciated value. Business property premiums are usually higher but allow business owners recover and replace property quickly.

Property Insurance helps protect and replace homes after an event happens that destroys or damages the home. Property insurance is a very important part of owning a property. Knowing which insurance coverage you need and how much coverage can help protect you when the event arises.  

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