Home is where love resides, memories are created, family always belong, and laughter never ends. It’s the safety net and comfort zone of most people. Moreover, your house is also a tangible representation of your hard work, determination, achievement, and investment in life. Hence you need to protect this asset and other properties from unpredictable and fortuitous happenings such as storm, flood, fire, earthquake, and volcanic eruption.
Property Insurance and How Does it Work?
Property insurance refers to insurance policies that provide either assurance of property protection or liability coverage for property owners. It can include a number of policies, such as homeowners insurance, renters insurance, flood insurance, and earthquake insurance. Property is insured in two main ways—open hazards and named hazards.
Open hazards cover all causes of damage that are not specifically excluded in the policy. Open hazard policies exclusions commonly include damage caused by earthquakes, floods, nuclear incidents, acts of terrorism and war. Meanwhile, named hazards require the actual cause of the loss to be included in the insurance policy to be issued. The more common named hazards include damage-causing incidents such as fire, lightning, explosion, and theft.
Property insurance provides property coverage for potential losses to both the construction of the building and its contents. In the event of damages or theft, property insurance shall provide a financial refund to the owner or renter of the structure and its contents. Moreover, it also provides reimbursement to a person other than the owner or occupant if that person is injured on the property.
Types of Property Insurance Coverage
The types of property insurance coverage include the following replacement cost, actual cash value, and extended replacement costs. Let us identify them more closely.
- Replacement costs shall cover the cost of restoring or replacing property at the same or equivalent value regardless of depreciation or appreciation. The premium is based on the value of the replacement cost rather than the cash value of the asset.
- Actual cash value coverage pays a replacement cost to the owner or renter minus depreciation.
- Extended replacement costs will pay more than the coverage limit if construction costs have increased. Nonetheless, this will typically not exceed 25% of the mark. If you sign up for insurance, the limit is the maximum amount of value that the insurance company will pay for a given situation or case.
Advantages Of Property Insurance
You must be asking now, do I need property insurance? Is it worth it to invest in one? Let us dive right into the advantages of having one.
Will Encourage People to Save
Investing in property insurance enables a person or business to set aside a certain amount at a certain period of time or as per agreed upon in the policy. Thus it encourages people to develop a habit of saving a portion of their income in order to reduce unnecessary expenses in unforeseen circumstances. Knowing how to manage available resources can help one to become financially free.
Offers Financial Protection From Risks
Property insurance is the answer to keeping your asset safe and secured regardless of whatever will happen. It provides protection against most risks to property, such as fire, theft and some fortuitous damage. There are many insurance agencies that offer protection to your valuable assets. One of which is Dave Christy State Farm Insurance that currently serves all of Washington, Oregon & Idaho. Among their many products and services include auto insurance, home insurance, condo insurance, renters insurance, motorcycle insurance, farm or ranch insurance, personal insurance, business or commercial insurance, boat insurance and many more.
Signing up for insurance policy enables you to have peace of mind by ensuring against possibly disturbing financial loss if destruction occurs in your house.
Aside from financial protection for your valuable assets, there are policy insurances that also offer provision for liability coverage. It protects you from lawsuits if someone gets injured while in the jurisdiction of your property. The financial protection that can be offered by insurances are truly valuable during emergency situations.
Replenishes Income Despite Loss
People usually buy insurance with the hope that it can replenish income after a disaster or loss. It gives people the guarantee and assurance that they will not be in a heavy burden when uncertain loss will take place in the future.
Property insurance benefits enables families to go through a recovery and reconstruction process in a timely manner. It helps them to readily get back to their normal lives after facing unexpected circumstances caused by natural or human acts.
There is nothing better in life than not having to worry about any unexpected accidents or robberies. It does not only help people to recover financially. There are psychological benefits that go along with it too. They won’t be pressed hard thinking on how they will recover and surpass financial or property loss. Hence, insurance provides smooth transition in the moving on process.
Helps to Develop Job Opportunities
Property insurance has become a growing industry within the passage of time. People and business entities are encouraged to engage in it considering all the benefits in stored for every policy. As such, it has provided lots of career opportunities for people who qualified the standards of becoming an agent.
Disadvantages Of Home or Property Insurance
There are always two sides of the coin. As to home or property insurance, these are the disadvantages that you need to look into.
Getting yourself and your property insured is certainly an additional expense that you need to set aside in your budget. Moreover, maintaining the insurance can be very costly. Some insurance coverages are very basic and would require additional riders to provide comprehensive coverage. Thus, you need to closely examine the coverage included in any insurance that you plan to avail.
Most insurance companies will use procedural tactics to deny property owners of their claims. To keep yourself armed from this down side, you must practice organized and proper documentation of your records, proof of ownership and inventory of your items especially for events such as robberies and disasters.
Most insurance claims would take time to process because of lengthy legal formalities. Insurance companies on their end, have to evaluate the damage and they also have to determine an accurate accounting of loss. The waiting time can be frustrating to some.
Acquiring properties might give you a sense of fulfillment at the onset. But, having it insured can certainly provide you advantages and disadvantages that you need to look into. Before procuring one for your properties, check on your end first if the advantages far outweighs the disadvantages. If you find that having property insurance is worth it, don’t hesitate to get one. Should you need further assistance on having one, check Dave Christy State Farm. They would gladly partner with you to guide you through in choosing the best coverage just for you.
Interesting related article: “What do home insurance policies cover?“