The Importance Of Property Insurance

Coverage
According to a survey published in the Journal of Financial Planning, many homeowners have vastly misguided views of what their homeowners insurance actually covers. According to this survey conducted by the National Association of Insurance Commissioners, “One third of homeowners believe flood damage will be covered by their standard policy. Over half think their policy covers them in the event of a water line break. Thirty-five percent say they will be compensated for an earthquake, and a slightly lesser proportion thinks mold is covered.”
In actuality, the typical perils (causes of property destruction) that are typically not coveredare:

• Flood damage (this is a separate policy)
• Earthquake (this is also a separate policy)
• Mold
• Acts of war
• Parts of the property in disrepair (Including worn-out plumbing, electrical wiring, air conditioners, heating units and roofing).

Policies are often written so that for something to be covered, it must be “sudden and accidental”, meaning that it wasn’t a slow leak that caused damage over many months. Often this is not covered by insurance. If your roof caves in from old age, and not from storm damage, it will likely not be covered.

The typical perils which typically are covered include:

• Fire
• Wind (tornado or hurricane)
• Hail
• Theft

Liability Coverage
In addition to covering the value of your home or other property, many insurance policies also include an important provision for liability coverage. You may not think this is very important, being the careful person that you are, however, there are scores of eager lawyers in every city searching high and low for lawsuits against people such as yourself.

If your neighbor’s house catches fire because you left your charcoal grill unattended, who do you think will pay for the damage caused by the fire? You will. You have paid the insurance company your premiums so that they will pay for larger claims when they do occur. The same goes for someone who is hurt and requires medical attention while on your property.