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eLearning Series:
Your Most Popular Insurance Questions
Answers For Health and Home
Insurance
( 50 articles
in this series )
Property Damage & Insurance:
What
You Need To Know
There are two types of property damage that
you need to be insured against: damage that is done to your
own property by a third party or some uncontrollable force
and damage that you may do to someone else’s property. In either
circumstance, adequate insurance coverage can save you from
financial catastrophe.
Auto Insurance and Property Damage
The parts of an automobile insurance policy that deal with
damage to your own vehicle are collision and comprehensive
coverage. Collision coverage protects the policyholder in case
his or her vehicle collides with another vehicle or object.
This is the case even if the policyholder caused the accident.
Comprehensive coverage protects the policyholder in case the
vehicle is destroyed or damaged by circumstances apart from
a collision. These circumstances include: theft, fire, vandalism,
damage from a fallen tree and other acts of nature. The premiums
for this type of insurance are hefty and the policy will most
likely require some sort of deductible. Make sure to talk to
several insurance brokers and ask about all available policies
before making a final decision.
While collision and comprehensive coverage protect the policyholder’s
vehicle, the personal property liability portion of an insurance
policy covers the vehicle and personal property of a third
party. There are usually state minimums for this sort of coverage,
but they are rarely enough to financially protect the policyholder
in the case of serious property damage.
Homeowner’s Insurance and Property Damage
If you start thinking about protecting yourself against property
damage to your home and its contents only after the damage
has occurred, then you might just be too late. An adequate
response to property damage requires pre-planning and vigilance
on the part of the homeowner. If policies kept aren’t up-to-date
and preparations made before damage occurs then the financial
fallout could be severe.
When you first purchase your home you should sit down with
your broker and go over all aspects of your homeowner’s insurance
policy. Insurance can be a pretty mundane subject, but it’s
important that you understand your policy. Don’t be afraid
to ask questions. It’s your home and property that is being
protected. A typical homeowner’s policy will cover the house
and any building attached to it, detached buildings, plumbing,
all electrical wiring, air conditioning, built-in appliances,
personal property within the home and living expenses should
you have to evacuate your home while it’s being repaired. The
basic coverage doesn’t protect everything in your home, so
you may need to add to your existing insurance if you want
to increase coverage or include additional items.
It seems like everything associated with owning a home is
expensive and, as a result, it can be incredibly easy for a
homeowner to rationalize doing without specific types of homeowner’s
insurance. The reality is that you never know what’s
going to happen and should acquire all the insurance coverage
you
can afford. For example, most people are not aware of how common
floods actually are, even out of designated flood zones. So,
it would be very simple for a homeowner living outside a flood
zone to convince he or herself that flood insurance is unnecessary.
This is a mistake. If there is even the slightest chance that
your home could be affected by floodwaters, you need flood
insurance. Your regular homeowner’s policy won’t cover flood
damage and federal assistance isn’t made available unless the
area is declared a federal disaster.
Once
you have your policies in place, make sure to keep the
coverage limits up to date. Find out what local home values
and re-building costs are in your area and make sure that the
coverage in your policy is commensurate with those values.
You should also reevaluate your personal property – the contents
of the home - on a regular basis and increase coverage limits
if necessary. Keep an updated photo inventory of your personal
property (along with any relevant appraisal records) at a location
other than your home. You might want to keep a copy of your
homeowner’s policies and your agent’s contact information at
this location as well.
Renters can also experience devastating property damage and
some may not realize that the homeowner’s policy will not cover
the renter’s personal property. This is why carrying an adequate
amount of renter’s insurance is so very important.
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SolveYourProblem.com : 2005
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