There are many types of insurances in the market that promise to safeguard you and your loved ones from calamities and accidents. Life insurance and car insurance are the common kinds though you may also have heard of the one we are concerned about within this article- property insurance. Since it is not the most famous insurance there is a chance you would not know about this insurance in detail. So let us try to make things a bit more clear for you by explaining some key factors about property insurance.
Defining property insurance
Property insurance is like any other insurance that you know of. It is there to cover the costs of an insured unit in case of an accident or calamity. Property insurance deals with damage to your property. Your insurance will cover the cost of the damage to your house in certain events. An expert at tatil insurance explains that since house repairs can sometimes cost a fortune, it is beneficial to apply for this insurance. Although there are some things that you need to know before you dive into such insurances without a worry in the world. Let’s have a look at some key points.
We know that property insurance covers damages to your property but do you actually know what types of damages are covered and which are not? 1 out of 3 people in the states do not know about the actual coverage their property insurance provides. Many people are under the misunderstanding that the insurance would cover all types of damages which is obviously not true. If it were so then the insurance companies would all go broke within months of starting operations.
There are some incidents that are not covered by property insurance and these include:
- Floods – The damage caused by floods is not covered by common property insurance. There are different insurances available for flood-related damages.
- Earthquake – The damage caused to structures due to an earthquake is not considered under the coverage of property insurance. Repairs due to such incidents have to be taken care of by the owners themselves. So suppose if your building forms a huge crack during an earthquake it will not be covered by your normal property insurance. There are other types of insurances which you can get to be safeguarded by an earthquake.
- Maintenance issues – There is no coverage for damages due to negligence. Without proper maintenance, everything can start falling apart. Electrical wiring, rusty pipes, leaking ducts and so on are not covered by common property insurance.
The point of these insurances is that any sudden mishap or accident which could not be avoided should be covered. Things that happen at a slow pace like leaking pipes due to low maintenance are therefore not covered.
Actual coverage involves incidents that you would have had no control over. These are mostly sudden accidents or mishaps that damage your property. Below is a list of the things that you can ask your property insurance company to cover:
- Explosion – Any type of explosions like a gas cylinder explosion or any other type of explosion that damages your house will be covered.
- Fire – A fire caused due to gas leakage, lightning, or so on will be easily covered.
- Theft- Theft is a very common occurrence all over the world and it can leave a person completely distraught. Thankfully, theft is also covered under most common property insurances.
- Volcano – Damage caused by volcanoes and other eruptions can be deadly to houses. Property insurance covers such cases of damages caused due to eruptions.
- Riots – Riots had to be covered by companies due to extensive damage to people’s houses. Large mobs often leave a trail of destruction to private property.
- Aircraft or car crash – Seeing a car crashed into a home is not a very common sight but it is still common enough when you compare it to an aircraft crash. Yes, aircrafts do crash into homes from time to time. If not a whole aircraft then even some debris can cause a lot of damage to your property which is usually covered by insurance.
Apart from simply covering the damages to your home, there is another advantage of property insurance cover and it is called liability coverage.
Liability coverage is very important and is best explained with the help of an example-
So suppose you have gone on a vacation and forgot to turn off a faucet in the washroom. The water damage from the leaking faucet reaches your neighbor’s wall which damages a lot of their property. Your neighbors can sue you for this and make you pay some very heavy fines for the repairs. You might just go broke while paying such hefty fines. Although, if you have liability coverage then the insurance company will take care of such payments.
Other things to look out for
There are a lot of people who have a place of business inside their homes. This does not include places like a study but they include garages that tend to customers and other workshops where physical work is done. Such areas inside a house are not covered by simple property insurance. To get coverage for these places you will have to apply for commercial insurance.
Another thing that you need to look out for is that you should not leave your house vacant for more than 30 days as it can lead to the cancellation of the insurance policy. This is simply because leaving the home unattended for so long can make it highly susceptible to damages like water leakage, fire, or thefts. Thus insurance companies simply cancel such policies. To cover such properties which stay vacant for a long time there are other types of insurances that you can apply for.
Art and Jewellery
Art and jewelry are usually insured after you add on a ‘floater’ to your main policy. Expensive pieces of art and jewelry can be insured but such policies have a limit on the amount of cover you will receive. So make sure you ask your agent regarding the cap on such coverages.
Coinsurance clauses are a little tricky to understand. These are basically some clauses in a policy that come into play in a certain situation. The situation which usually gets us to this clause is when the owner asks to insure a property for the amount they paid for it. In such situations, the insurance company might ask you as the owner to share an amount in the repair costs. The amounts are decided by taking into consideration the price you paid for the property compared to its price at the time of the policy signing.
Property insurance premium works like any other insurance premium. The higher the risk of activating insurance, the higher will be the premium charged. Therefore there are many factors that can put your property at risk and increase the amount of premium you pay for the insurance. If you live in an area that is prone to floods, storms, tornadoes, volcanic eruptions, or similar natural disasters then your premium will be high. Your premium might also spike if you own a dog, if you smoke or if you have a swimming pool.
Property insurances might seem straightforward but they are very tricky. You need to know each and every detail before you apply for insurance. You need to know what these insurances cover and what they don’t. Knowing everything about them will help you deal with them better in the future.