Property Insurance is so very important in running a business or owning a home. While property insurance is not required by law it may be required by loan or lease agreements. If you don’t have a requirement to have property insurance and you decide not to get this coverage you may be making a mistake. Business owners if your business suffers damage or loss you may not be able to recover financially and homeowners if your home is damaged you will have added expenses that you may not be able to cover. Taking another look at property insurance may help you save money in the long run.
Property insurance covers buildings, associated buildings like storage or garages, the items inside the buildings, and many other areas that could be considered property like trademarks and your identity. Choosing the right property insurance has a few factors you should consider; location, possible risks and perils, what needs to be covered, and cost. If you own a business you will want to look at the option of Business Owners Plan.
The Basics:
Two basic types of property insurance: Broad or Single/Specific peril. The differences between these two types of policies are pretty specific. Here is where you will start deciding on what policy is right for your home or business.
SINGLE/SPECIFIC peril covers only the perils that are named in the contract for example; flood. If you have this listed in the contract as flood from the river you are covered if the flood came from the river. However, say there was a fire at a house up the hill and the water used to put out the fire from the air flowed down towards the river and your house or business got in the way and now you are flooded. This flooding would not be covered, unless you have the principal of Proximate cause included in your policy. Say this water was taken from the river. This would mean that damage or loss was covered because the unnamed peril (flooding from fire dousing) was proved to be caused by the named peril (water from the river). If you decide to save money and get the named peril policy make sure that the contract has the Principal of Proximate Cause.
BROAD peril is a little easier to understand. This covers any type of loss or damage to property unless the cause is excluded in the contract. Open Peril contracts cover, basic perils (coverage on basic damages or loss), perils of nature (flooding, tornadoes, hurricanes anything mother nature throws at you), social perils (riot and strikes are considered social perils), perils of chemical nature (explosions or burns due to chemicals), and miscellaneous perils (damage caused by a vehicle driving through house etc). You have the option to exclude some of these perils subset out to lower the policy premiums however, if something does happen and you excluded this out, it is no longer covered. Insurance policies vary so be sure to check what specific examples are listed in the different peril categories.
Location, Location, Location:
A way to save money is to look at your business or home location and determine what types of perils are possible. If you are located in California fire and earth quake may be important to you. If you are located in the mountains you may want to be insured for flooding, snow, ice, and mud slides. If your location is a major city like New York you might want to include terrorism or social perils to include strike and riots.
Examining your location will help you to choose what you should include and what may be costing you additional money that is not needed. Be careful when excluding items in your contract and get the best possible coverage you can.
Business Income and Casualty:
Business Owners Property (BOP): business owners have the option to purchase both property and liability insurance in BOPs. Some options in this category that are related to property are interruption insurance and extra expense insurance. INTERRUPTION insurance covers loss of business when another business damage is interrupting your businesses ability to be open. EXTRA EXPENSE insurance will cover moving costs to a temporary or permanent location. Both of these are casualty areas that impact the property coverage.
An example of needing this is that your business is located in a mall. A bomb has destroyed half of the mall. Fortunately your business was safe but the building has now been condemned. You will need to relocate and you will lose time in business, having these two clauses included in your policy will cover you during the down time and cover relocation expenses.
Coverage Areas:
Property: the buildings and associated buildings you have listed in your property insurance along with any personal items that you have listed are covered under your property risk. Make sure you bring a list of anything and everything you believe should be covered when purchasing your new plan. For example; if you own a business in a mall and have storage off site some policies will allow you to cover the storage facility as well. Perhaps you own a warehouse and the property is full of stock but you get robbed and you have this covered under associated buildings but you did not include the stock that is stored there. The building damage is covered but you have lost your goods.
Property insurance can also include casualty, liability, identity, and trade marks. You will want to speak to your insurer regarding the value of insuring these in comparison to the other policies you have already in place. These areas can overlap and cause you to have double coverage when you only need single coverage. Being informed and asking questions will help you save money.
In conclusion there are a lot of options available in property insurance both business and home. You will want to research your location and know what needs to be covered. Plan for unexpected occurrences that is what insurance is all about and make sure you have a solid piece of mind when it comes to the safety of your property. There are always changes in the world so don’t just purchase the insurance and put the policy away never to be seen again. Making sure you are getting the best value for your money includes staying informed. Create a habit of dusting off the policy once a year and going over what is and isn’t covered. Make changes if necessary and enjoy the security you have created.