Property Insurance Law

Property insurance provides protection against risks to the property like risk of damage due to some natural calamity or theft or fire etc. Property Insurance in United States is of two kinds-Open peril property insurance and named peril property insurance coverage. In open peril, the property is protected against all the risks which are not explicitly excluded from the policy and in named peril, the property is protected against the risk of perils which is named in the policy. Some examples of specific policies are fire insurance, earth quake insurance, flood insurance etc.

Property Insurance covers in United States are usually of three types:

  1. Replacement Cost Coverage: Under replacement cost coverage the insurance company will pay the cost of replacing your property without any regard to the depreciation on appreciation. The premiums for these types of policies are calculated based on the replacement cost value of your property. You can also opt for extended replacement cost coverage, wherein the insurance company will pay over the cost of replacement if the actual cost of replacement has increased. Usually, the extension is only for 25% of the limit set.
  2. Actual Cash Value Coverage: Under actual cash value the insurance company will pay the replacement cost minus depreciation. In this policy one need to keep in view that the insurance value needs to step up if the actual value increases.
  3. Alternative Living Arrangement: Under this type of insurance, the insurance company will bear the cost of your alternative stay arrangement in case the property insured has been rendered uninhabitable.

In US, most of the states are prone to natural calamities like hurricane or thunders and hence property insurance becomes more inevitable. The  premium for property insurance in the states which are prone to extreme weather conditions or are prone to natural calamities are high.

It is to be noted that damage due to terrorism, missile testing operation and riot is also covered. However, damages due to war , civil war, nuclear activity, overrunning of electronic equipment and damage due to negligence are not covered.

Law Article Archive