Property insurance protects your house, apartment, or other home from damage caused by storms and fire, vandalism, and theft, as well as liability protection in case someone injures themselves on your property.
While property insurance can cover many expenses related to your home, it’s important to understand the limitations of this type of coverage so you know what to expect when filing a claim.
Here’s a list of some of the major types of coverage you can expect from property insurance and what’s typically not covered.
The Homeowner’s Policy
A homeowner’s policy is there to protect your home and its contents, up to a certain amount. The term dwelling refers to your actual house (which includes attached structures such as garages, porches, and decks), while personal property includes furniture, clothing, electronics, and other items inside your home.
Don’t forget that coverage can vary from one insurance company to another—and even within policies from the same insurer.
For example, depending on what state you live in or which insurer you choose (or whether you buy a standalone policy or add it onto an auto or life policy), personal liability coverage might be limited or even nonexistent for a rental property.
Make sure you know exactly what’s covered and what isn’t—both for your house and its contents, as well as your valuables.
What happens if you have to file a claim and can’t find your receipts or tags because they were stolen in a burglary?
Additional Dwelling Coverage
If you own a vacation home or second property, an additional dwelling policy may be your best bet for adequate coverage.
This additional policy offers coverage to other structures on your property—sheds, guest houses, and more—in addition to your primary dwelling.
Additional dwelling policies also cover personal belongings in those structures, giving you plenty of protection against disaster at a reasonable price.
Of course, make sure you understand what is and isn’t covered before signing up.
What isn’t covered? Don’t expect additional dwelling coverage to protect your rental units or investment properties.
This kind of policy won’t help you if a flood wipes out your tenants’ belongings or if a fire destroys your investments.
You should also know that some states don’t even allow additional dwelling policies, so make sure you check with your insurance provider before investing in an additional dwelling policy.
Finally, make sure you understand exactly what will be covered in case of disaster.
Personal Property Floater
If you have personal property, like artwork or jewelry, that’s valuable, you should consider getting a floater in your policy.
A floater provides protection for those kinds of items; it gives you more than what your basic home and auto coverage would provide.
If there are specific valuables that you want to make sure are covered (or not covered), though, it can be a good idea to specify those within your policy. You should talk with your agent about whether that’s something you should do when writing up an insurance plan for yourself.
What happens if you’re sued in court because someone got hurt on your property, or because they broke something while visiting?
In those situations, a personal liability policy can help. It covers you when you’re held liable for another person’s injuries or damages; it also covers your legal fees.
Medical Payments Coverage
When most people think of property insurance, they don’t consider that it may cover medical payments for injuries incurred on a neighbor’s property.
Medical payments coverage covers up to $1,000 per person and $5,000 for all persons injured in an accident on someone else’s property.
This coverage also applies if you slip and fall in your home because of ice or snow, although it typically applies only if you sustain injuries above your waist. (Example: Head injuries from falling down stairs wouldn’t be covered.)
Medical Payments coverage typically isn’t included with renter’s insurance.
There are a few more property insurance coverage types that can help protect you if you’re a renter. If you are renting an apartment, a condominium or a house, it’s important to know what kinds of coverage you have for medical payments and liability.
Ask your insurance agent what coverages will apply to your personal circumstances and whether they are included in your policy.
When you own or lease a home, apartment, or business property—or land that could be converted into commercial space—liability protection may protect your personal assets from claims of bodily injury and/or property damage.
If someone slips on your property and breaks their ankle, for example, your liability coverage will pay for their medical bills.
This type of insurance can also protect you if a visitor to your home sues you for injuries sustained there.
Liability policies will only cover what’s considered a reasonable amount, so it’s important to make sure that your policy is adequate before signing any papers!
Loss Assessment Protection
After you’ve gotten a handle on your coverage, it’s important to know what isn’t covered by property insurance.
It turns out that some of these exclusions are very common. Most homeowners’ policies don’t cover loss assessment costs—and if you do have them covered, you may be liable for as much as 20 percent of whatever it costs to repair or replace your damaged home.
You also won’t find flood or earthquake protection in most standard policies. Flood insurance and earthquake insurance aren’t required on homeowners’ insurance, but if you live in a flood-prone area (or an area with a history of earthquakes), it might be worth checking into other options.
Settling Up After a Disaster
Although property insurance can cover many aspects of damage and loss, it’s important to know what your policy covers (and what it doesn’t).
For example, you may need flood insurance or earthquake coverage if you live in an area prone to natural disasters.
Your home or business may also be insured under multiple policies; for example, if your landlord carries separate property insurance on your building, you may be able to make a claim against that policy in addition to any coverage you have through your homeowner’s policy.
Pay close attention to your property insurance agreement so that when disaster strikes—you’re ready to settle up.
Ask Questions Before You Buy
Make sure you ask your insurance agent questions before purchasing a policy. It’s better to find out what is covered, what isn’t and how much you will pay up front than to wait until after an accident.
This way, you can make an informed decision on whether or not it makes sense for you to purchase property insurance in full.
The best thing about asking all of these questions beforehand is that it could help prevent paying for expensive coverage on things you don’t really need, such as tornado insurance if tornadoes don’t hit your area.
Many people also want earthquake insurance but earthquakes are rare where they live. Or perhaps flood policies would be better served because floods are more likely where they live than fires or theft.