The fundamental goal of purchasing insurance is to make you financially complete after a loss. In return for a guarantee from the company, you accept that you will bear the burden of a significant but uncertain loss in the future to pay a specific small price to an insurance company today.
Let’s say you have a house that you have — with no insurance, free and clear. While your property taxes are still paid, you have every right to use the home as long as you like, according to the law. You can live, rent, vacate, or even sell it if you want.
However, it is up to you to cover the full cost of repairing a home if the giant tree in the backyard falls on your house that causes severe damage. That is the main reason for ensuring property that you would pay — in whole or in part — to fix or substitute your property.
Living costs are on the rise across the country, and as a homeowner, the absence of property insurances seems financially irresponsible. That said, your home is the biggest and perhaps most expensive investment in your life. Therefore, protecting your investment by insurance makes only practical sense. Many homeowners worldwide are doing this already. There are five reasons why it is essential to have such coverage.
Protection from Damage to Property
Property insurance covers many natural disasters, including, but not limited to, mountains, floods, fires, earthquakes, robbery, and other weather damages. No property is invulnerable to fires, floods, or squalls, no matter how large, location, or other security features you may have added to your home. In some cases, the land built on your property can also erode and shoot down your house. Homes have a lot of vulnerabilities as a massive structure; cover it with property insurance for an earthquake or hurricane.
Contra Liability Protection
Their liability coverage clause is a less known benefit of the property insurance policies. This provision is included in many other forms of insurance policies, including car insurance. Sure, being careful can help prevent many accidents and injuries, but your neighbors or your neighbor’s home could be part of an incident. Your property insurance liability coverage can help protect against these potentially expensive incidents.
Power Outages Protection
Power outages have been more common in the past, but they still happen now and then. If your computer or other electronics are running on a power cable, these failures can seriously harm your devices and significantly reduce their lifetime due to surges. A power outage can also lead to food being spoiled; therefore, a large amount of homeowners property insurance includes a cooling stock that can pay up to $500.
Your Art and Jewelry Protection
Ask your insurance provider to add a floater to your property insurance for homeowners who have expensive pieces of jewelry or other valuable items in their homes. This add-on feature pays off your items for any damages. Please be aware, however, that these add-ons are usually paid only for a fixed amount.
Commercial Venture Protection
You are liable for structural damage or personal injury caused during the occupant if you chose to rent your property to a third party, whether as a dorm for school pupils, families with children, or single persons with pets. If your landlord is harmed and a lawsuit is filed, insurance can be covered as well. Also, if you are caught up in a situation where you have to lodge a lawyer for not paying rent or damaging your property against your tenants, property insurance can cover that as well.
Here is the checklist of search and purchasing tips for an insurance carrier.
1. Compare costs and insurers at the national level.
You want to make sure you are with a legitimate and reliable provider when it comes to insurance. Your first step should be to visit the website of your state’s insurance department to learn about ratings and any consumer complaints against the insurance company for each insurance company licensed for conducting business in your country. In Canada, make sure you work with insurance providers who have CAIB DESIGNATION from the Insurance Brokers Association of Canada. CAIB designation is a way for insurance experts to establish credibility with the industry clients. In other regions and cities, the website should also have a typical average cost of home insurance.
2. Do a health inspection for a company.
Investigate your insurance company on the websites of the top lenders and the Weiss Research and the National Insurance Commissars Association. These sites monitor consumer complaints and general feedback from customers’ claims processing and other data against the companies. In some instances, these websites also rate the financial health of a home insurance company to see if the company is in a position to settle claims.
3. See the response to claims.
Following a significant loss, it could put your family in an awkward financial position to pay out-the-pocket to repair your home and expect your insurer’s reimbursement. Several insurers outsource core tasks, including claims handling.
In case your claim calls are received and handled, find out before purchasing a policy, whether licensed adapters or third-party call centers. Your agent should be able to provide feedback on its experience and reputation on the market.
Look at your insurer’s views on retention provisions, when the insurance company deducts some of its pay until a homeowner can prove the repair started, for a carrier with an established track record of fair, prompt payments.
4. Current satisfaction of policyholders.
Each company will say that it has a service of good claims. But you can reduce the conflict by asking your agent or a company representative to retain the insurance company, which proportion of policyholders annually renew. Many companies report retention rates of 80% to 90%. In the annual reports, online reviews, and good old-fashioned accounts of people of your trust, you will also find satisfaction information.
5. Get Multiple Opportunities.
Multiple quotes are essential in the search for all types of insurance; however, insurance is particularly important as the coverage needs can vary. The best overall results will be achieved by comparing several companies.
Five or so will provide you with a good sense of the offer and exploitation of the people in negotiations. However, you already have a relationship with insurers before receiving quotes from other enterprises. As mentioned previously, a carrier with which you are already dealing may offer a higher rate as a customer.
For seniors or people working from home, some companies offer a specific discount. The reason is that they are both more often on-site, which makes the home less likely to collapse.
About the Author
Jacques is an award-winning insurance professional who has worked in education since 2009 and in the insurance industry since 2013. In 2015 and 2019, he won an Insurance Council award for academic excellence after scoring 97% in his CAIB 3 exam and 96% in CAIB 4 (the highest marks in the province). He brings his study method, blended with his educational background and his ability to simplify complex ideas to students through these online courses.
Outside of his day job as an insurance broker, he lends his industry expertise to readers by writing for Insuranceopedia (a Canadian insurance publication) and Trusted Union among others. He’s also held educational webinars in front of hundreds of insurance professionals.