Property Insurance

Overview

Property insurance is specifically targeted to provide coverage to replace or repair physical damages incurred from accidents or events. There are different types of property insurance policies - such as business, home and auto - and it is often bundled with other types of insurance coverage, like liability insurance.

In broad terms, property insurance protects property against damage. It is an insurance that provides payments for claims made when the insured property receives some sort of damage that is covered under the property insurance policy.

How it Works

Property insurance can cover a lot of different types of damages. One phrase you will hear when dealing with property insurance plans is named perils, which are specific events that result in damages. These include events that are often termed as "acts of God," such as flood, fire or earthquakes. Property insurance that includes named perils is often specifically geared to that particular peril and may be provided as an add-on to a broader policy. Peril-specific insurance is sometimes available through the government since this type of insurance can be difficult to obtain. For example, homeowners in flood zones may be offered flood insurance through a government program.

Open perils are events that may happen and are not specifically listed as exclusions for the property insurance. Property insurance policies that cover open perils are also known as all-risk property insurance policies. Open peril property insurance coverage is usually more expensive than named peril property insurance coverage, but policy holders can often pick and choose what specific coverages they want for their property.

Reimbursement for claims depends on the type of property insurance coverage chosen. Actual cash value (ACV) claims are paid based on replacement cost plus depreciation on the item. Once a loss occurs, place a claim with your insurance carrier. You may need to submit supporting documentation, such as photographs of the item or a police report. The carrier may send out a claims adjuster, who will evaluate the extent of the damage or loss. Once this is completed, the insurance company will determine how much they will pay towards the repairs or replacement.

Benefits

Instead of paying for the claims filed against a business, it is always better to have property insurance. Having property insurance not only safeguards your business from any loss that might occur, but also provides adequate coverage for any kind of damage that might occur to your property. If you are not properly insured, an unfortunate event like an earthquake can ruin you financially and put you out of business.

Costs

You can reduce your premium costs by adding protection like burglar alarms and smoke detectors to your property. In many cases, insurance carriers will also offer discounts if you purchase more than one policy from them. For example, if you purchase homeowners insurance and auto insurance, you may be entitled to a discount.

Timing

Anybody who owns property should consider property insurance because it is an absolute necessity, especially for those located in high-risk areas such as flood prone zones. It is always best to get an insurance policy before you open a business, but if that is not possible it is recommended to get one as soon as possible.