Types of Property Insurance: What You Need To Know
January 6, 2022
In a world where there are so many unforeseeable variables and hazards that can affect us everyday like natural disasters, insurance is a way to alleviate some of those concerns.
When it comes to property insurance, there are a lot of aspiring property owners who are unaware of its importance. If you are one of those people, then you’ve come to the right place. In this blog post, we are going through the different types of property insurance as well as the benefits of having each one.
Homeowners insurance or home insurance is one of the most important and common types of property insurance. Although it’s possible to own a house without getting homeowners insurance, it’s incredibly difficult. Most mortgage lenders require buyers to get home insurance in order to receive a loan.
Robberies, explosions, and a variety of natural disasters can all cause significant damage to your house. Homeowners insurance provides coverage and a sense of peace about most unfortunate events that could affect your home. Here’s a look at what’s covered by the standard homeowners insurance policies:
- The repair, restoration, or replacement cost for items damaged due to fires, storms, vandalism, smoke or other unpredictable events.
- The structural elements of the home which means the foundations, walls, roofs, and floors.
- Electrical appliances and electronic equipment, along with furnishings and any personal items damaged because of an event covered by the insurance.
- Additional living expenses like a hotel room or restaurant meals in case you are temporarily unable to live in your house.
Commercial Property Insurance
Similar to homeowners insurance, commercial property insurance is designed to protect the owner of a commercial property from financial or legal damages caused by incidents such as a fire or theft.
Although terms vary from one insurance company to another, commercial property insurance typically covers:
- The physical office space
- Office equipment, such as computers, tools, and machinery
- Office furniture and fixtures, which can include desks, chairs, appliances, and supplies
- The inventory that your business sell
Commercial property insurance protects your business against the expenses or legal implications of certain events like property damage, injured employees, and compensation for workers. It is one of the best investments a business owner could make to protect themselves.
Insurance Against Natural Disasters
When you get property insurance, many natural disasters are usually covered in the policy, but not all natural disasters are. Nothing is as unpredictable as mother nature and you should always check to see what natural disasters are included in your property insurance policy. Depending on where you live, it may be smart for you to add more protection from natural disasters in your policy. Harsh weather such as hail, earthquakes, tornadoes, and more could damage your house significantly.
If you are new to the area, do your research beforehand to understand the typical weather routines in the area each year and also to understand the extreme weather circumstances that you may have even the slightest chance of encountering.
Flood Insurance Policy
Floods are a great example of a natural disaster that isn’t typically covered by standard insurance policies. Make sure to ask if flood coverage is included to your local insurance provider. Depending on where you live, it may make sense to get flood insurance or it may make sense to decide not to. However, if you live in a high-risk area for floods, then many mortgage lenders require borrowers to get flood insurance anyways.
Check out FEMA’s map to see if you live in a high-risk flood area.
Renters Insurance Policy
Although not mandatory by law, many landlords add a requirement in their lease mandating that all renters receive insurance during the term. The requirement is popular with landlords because the insurance protects them from any legal or financial blame in the case of an unexpected event that affects tenants.
For example, if a pipe bursts in the house and damages the renters possessions, the landlord would be found liable for the damage. However, if he has renter’s insurance, then he can file for a claim and replace the belongings that have been damaged.
Let’s take a look at everything that’s covered in renter’s insurance:
- The repair or replacement cost of a tenant’s personal belongings, which can include clothing, furniture and electronics.
- Damages to property or a guest’s medical bills if the landlord is found responsible for their injuries.
- If the residence rented is damaged and left uninhabitable, then the insurance would cover expenses like hotel bills.
It can be a hassle to pay extra for renter’s insurance. However, the protections you get benefits both you and your landlord immensely in the long run. Without insurance, you would be responsible for the cost of damaged personal property, furniture, or medical expenses. You’d also leave yourself vulnerable to legal action taken against you.
Property Insurance Is Worth The Cost
Insurance can sometimes feel like a perfect gift to someone who suffers from anxiety, and it can seem like a nuisance to those who aren’t as concerned about the unpredictable and rare events that could happen to us. However, if 2020 and 2021 has taught us anything, it’s that life is unexpected and it’s best practice to always be prepared for anything.
All the best.