When a person takes an insurance policy, he is protecting himself against some kind of risk. The risk may be to his life or there may be a risk of possible liability or it may be the risk of damage to property. Property, whether it is residential or commercial space, involves a huge investment. So any damage due to natural causes like earth quakes of floods or man-made causes like arson would cause heavy losses to the owner. So it makes sense for every property owner to get his property adequately insured by buying the right kind of property insurance policies.
Property Insurance policies are classified into different types.
On the basis of Perils
‘Open perils’ policies – These policies cover all kinds of perils to the property insured except those that are specifically mentioned as exclusions. Earthquakes, floods, war and terror attacks are the general exclusions in property insurance policies.
‘Named perils’ policies – When such a policy is taken, the insured is indemnified only for the loss caused due to the specific perils named in the policy. A policy which has mentioned fire, arson and earthquake as perils would not cover loss caused to the property due to a storm.
On the basis of coverage
Property insurance policies will differ on the basis of the coverage which the insured has opted for.
Policies with replacement cost coverage
Taking a policy with this coverage would mean that the insurer would pay the insured the cost of replacing the damaged property.
Policies with actual cash value coverage
In this case, the insurance company would consider the actual cash value of the damaged property that is, replacement cost of property minus depreciation.
Policies which cover ‘alternative living arrangements’
These property insurance policies would ensure that the insurance company will compensate the expenditure incurred in making alternative living arrangements when the residential property of the insured is damaged or destroyed.
On the basis of use of property
Policies for residential property
These policies are specifically for a particular residence of the insured.
Policies for commercial property
These insurance policies are for commercial space – factories, offices, malls and so on.
When the insured opts for a deductible when taking an insurance policy, he is undertaking to bear a partial loss in the event of damage and the insurance company would compensate him for the remaining amount. Opting for deductibles helps the insured to reduce the premium amount for the property insurance policy. However, the insured is first required to be certain that he can indeed bear the amount of the deductible in the event of damage to the property.
Generally, property insurance policies are bought through insurance agents. They provide data on comparative rates of different insurers and the person wishing to take property insurance, selects the insurer who offers the best terms.
With the advent of the internet, buying property insurance has become even more simpler. One can get information about property insurance rates from the web site of the insurer. An even better method would be to visit an insurance website which is connected to various property insurers. Such sites offer various facilities. One can calculate premium for a particular policy amount using the online calculator provided or conversely can find out the amount for which a policy can be taken based on the premium which one can afford.
A person wanting to compare the terms of various property insurance policies can enter some basic details in the form provided and would get a table showing the comparisons. Without depending on anybody, he can decide on the best policy after studying what each has to offer.
Property owners may feel that buying property insurance policies are a waste. But instead of repenting later , it would be better to take precautions against loss to the home or commercial structure by insuring one’s property.