In this imperfect world we live in, it's inevitable that someday you'll suffer some kind of property damage. It's therefore important that you understand the two types of property damage that you need to be insured against. First, damage done to your own property by a third party or an "act of God" such as a flood, hurricane or tornado, etc. and second, damage that you do to someone else's property. In either circumstance, it's important to have enough insurance coverage to protect you from a financial disaster.
Auto Insurance & Property Damage
If you review your Auto Insurance policy, you'll see that your collision and comprehensive coverage is the section that deals with damage to your own vehicle. Collision coverage protects the policyholder against your vehicle colliding with another vehicle or object — even if the policyholder caused the accident.
Comprehensive coverage protects the policyholder in case the vehicle is destroyed or damaged by circumstances other than a collision, including theft, fire, vandalism, damage from a fallen tree and other acts of nature. The premiums for this type of insurance is costly and the policy will likely include a deductible that requires the policyholder to pay the first $100 or $500 or $1000 of the damage. The higher the deductible, the lower the cost, so make sure you talk to several insurance brokers and review all available policies before making your final decision.
Finally, the Personal Property Liability section of an auto insurance policy covers the vehicle and personal property of a third party. There are usually government minimums for this type of coverage, but they're rarely enough to protect the policyholder financially in the case of serious property damage, so it's important to look at additional options if you can afford them.
Homeowner's Insurance & Property Damage
It's important to start thinking about protecting yourself against property damage to your home and its contents long before any damage can occur. If you wait and you do have some damage, you might just be too late. Review your protection against property damage regularly with vigilance because if your policy isn't up-to-date the financial fallout could be severe. Always review your needs, especially if you add any big-ticket items or renovations to your home.
The time to start planning coverage is when you first purchase your home. Sit down with your broker and go over all aspects of your homeowner's insurance policy needs. Insurance can be a frustratingly mundane subject, but it's very important that you understand exactly what the policy covers, so don't be afraid to ask questions.
A typical homeowner's policy will cover the house and any building attached to it, detached buildings, plumbing, electrical wiring, air conditioning, built-in appliances, personal property within the home and living expenses should you have to temporarily vacate your home while it's being repaired. As you might guess, 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.
Yes, owning a home can be an expensive proposition, but too many homeowner's try to rationalize that they can get away without specific types of homeowner's insurance, only to have reality prove otherwise. You never know what's going to happen and so always, always acquire as much insurance coverage as you can afford.
For example, many people don't realize how common floods actually are, even out of designated flood zones. Therefore, it's a very easy for those living outside a flood zone to feel that flood insurance is unnecessary. This could prove to be a mistake. If there is even the slightest chance your home could be affected by floodwaters, flood insurance should be included in your policy. A regular homeowner's policy doesn't usually cover flood damage and government assistance isn't made available unless the area is declared a federal disaster, so it takes initiative on a home owner's part to add a flood insurance clause. Be smart. Do it.
Once you have your policies in place, make sure you keep your coverage limits up to date because of the ongoing fluctuation in house values. Do some regular research to find out what local home values and re-building costs are in your area and make sure that the coverage in your policy is equal to those values.
You should also reevaluate your personal property, that is, 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 suffer devastating property damages and they may not realize that a homeowner's policy will not cover a renter's personal property. This is why carrying a sufficient amount of renter's insurance is so important to protect against loss and financial setbacks if something should happen.
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Glenn Cutforth is a writer, eBook publisher and graphic designer.
Visit his websites at: Conquer Anxiety and Depression.com and HowToClassics.com
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Published by Glenn Cutforth on May 31, 2006 12:23 PM
