Greetings! Always a pleasure bringing to your eyes educational articles created for the purpose of giving you info on how to secure your future.
On this writeup, I'll be talking solely on property insurance.
Do well to stay till the end.
No human will love to purchase or build up a property, and a natural or man-made disaster will destroy it. If it happens that way, that will be great loss of money and property to the victim of the event. So what can a person do to make sure that he/she does not lose everything after a disaster? That's where Property insurance comes in.
So, allow me to take you through some basics of property insurance.
On this note, I'll be speaking on;
• What is Property insurance?
• How Property insurance works
• Types Of property insurance coverage
• Basic forms of property insurance
• Why should you get property insurance?
So let's get it.
WHAT IS PROPERTY INSURANCE?
Property insurance, as pointed out by the name, is a type of insurance policy that provides coverage for the protection of property for property owners.
They also provide liability coverage for property owners in the case of an outsider being injured on the property.
In a clearer explanation, property insurance provides financial coverage and reimbursement to the renter or owner of a structure and its contents in the case of theft or damage to that particular structure. Also, they provide coverage for a person other than the renter or owner if that person was injured on the property.
This type of insurance policy provides protection against most possible risks to property, including;
Theft, weather damage, fire and the likes.
Property insurance includes some specialized forms of insurance like home insurance, fire insurance, flood insurance, earthquake insurance, boiler insurance etc. And property is insured in two major ways namely; Open perils and Named perils.
- Open perils: This form of property insurance covers all the causes of loss not specifically excluded in the policy. The common exclusions on this type of policy includes damages that was caused by floods, nuclear incidents, earthquakes, war and acts of terrorism.
- Named perils: This form of property insurance requires that the actual cause of loss be listed in the policy for the insurance coverage to be provided. Common named perils include damage-causing events like lightning, explosion, fire and theft.
HOW PROPERTY INSURANCE WORKS
As explained in the forms of property insurance, perils covered by the insurance policy includes weather-related damages, which includes damage caused by wind, fire, smoke, hail, impact of snow on a structure, lightning and many other afflictions caused by weather. This insurance policy also protects against theft and vandalism of property, offering coverage for the structure and its contents. In the case of a person being hurt on the property and he/she decides to sue the owner or renter, there is also a liability coverage offered by the property insurance.
Let me give you a Case Of Property insurance.
On the night of 28th July, 2019, an unexplainable sudden fire broke out in the beautiful home of Mr and Mrs Hart, and in seconds, the whole house was filled with smoke. The fire spread so drastically and fast that it was impossible to stop/limit the damages and the whole 'once beautiful' house burnt down to ashes. Thankfully and fortunately, no soul was in the house so no one was hurt. The only thing gone was the house.
Now, the good thing is the couple had a home insurance policy, so they were on a safer side.
They filed their claim with the insurance company and all necessary papers were submitted, and since the house was burnt beyond repair, it needed to be rebuilt from scratch so they got an estimated quote for the rebuild again.
Then the property insurance company appointed a claim adjuster to review the claim, and after collecting necessary evidence, visiting the site, and consulting experts, the claim adjuster finalized the claim amount at 85% of the total rebuilding cost. The amount was then paid to Mr and Mrs Hart.
Had there been no property insurance coverage for the house, the couple would have to bear the whole cost of the rebuilding on their own.
Now let's assume that there was a worker in that house at the time of the fire breakout and he/she managed to escape but sustained injuries, and decides to sue the couple, the liability coverage offered by the property insurance will cover this part.
TYPES OF PROPERTY INSURANCE COVERAGE
There are three main types of property insurance coverage in existence.
They are;
- Actual Cash Value
- Replacement Cost
- Extended Replacement Costs
Let's take a peek into each of them.
- Actual Cash Value: This type of insurance coverage pays the renter or owner of the property the replacement cost minus depreciation. For example, if the destroyed property is 10 years old, the customer does not get a new one, but the value of a 10-year old property.
- Replacement Cost: In this type of insurance coverage, the insurance company covers the cost of replacing or repairing property at the same or equal value. Rather than the cost value of items, this coverage is based on the replacement cost values.
- Extended Replacement Costs: This type of property insurance coverage pays more than the coverage limit if the costs for construction have gone up. This usually won't be more than 25% of the limit, however. When this coverage is purchased, the limit is the maximum amount of benefit the insurance company will pay for a given occurrence or situation.
WHY SHOULD YOU GET PROPERTY INSURANCE?
Well, as it is now, costs of living around the country are increasing, and as a property or homeowner, it seems like nothing but financial irresponsibility to not purchase a property insurance. With that being said, your home is perhaps the most expensive and biggest investment you'll ever make in the course of your lifetime. So, it makes a lot of sense to protect your investment with an insurance policy. A lot of property and homeowners around the globe are already doing this, in fact.
You wouldn't want to wake up one day to the nightmare of seeing your dream home damaged due to any form of disaster, so it is beneficial to purchase a property insurance policy to avoid bearing the whole expenses alone.
