Wouldn’t it be nice if we could all feel as confident and secure as Linus does when he carries his security blanket? Property insurance can give you that same feeling – but with real protection. (Unfortunately, Linus’ blanket wouldn’t really protect him much.)
Property insurance is an umbrella term. It covers several different types of insurance and all have individual guidelines. These types of insurance include:
- Household insurance
- Condo/Co-op insurance
- Landlord’s Insurance
- Renters insurance
- Mobile home insurance
- Flood insurance
- Earthquake insurance
- For each type of policy, we’ll go over what they are, why you might need them, and what they apply to. But first, let’s look at the basics.
What Is Property Insurance?
As we mentioned above, property insurance is just a broad term that covers several different types of insurance, including homeowners, condos, landlords, renters, mobile homes, flood, and earthquake insurance. In general, all these policies provide three types of protection:
- Responsibility
- Structural
- Personal property
A few types deviate from these three standard protections, but we’ll cover those in a minute.
Property insurance basically insures various types of real estate against things called covered perils. What is a covered peril? I’m glad you asked. A hazard is a natural or unnatural hazard. Your policy will specify the risks that are specifically covered for your property.
These covered perils usually include natural events such as fire, smoke, wind, hail, snow, lightning, flood and earthquake. Covered perils may also include unnatural events such as vandalism and theft.
Another important detail to note: If someone (besides you) is injured on your property and a court finds you liable, most property insurance policies provide liability coverage so you don’t get stuck paying legal and/or medical expenses out of your own pocket.
You might be thinking, that will never happen to me! But you never know what awaits you. Life has a sneaky way of throwing curves when you’re not looking.
Maybe your dinner guest accidentally trips on the stairs you wanted to fix, breaks their ankle, and sues you. Well, they’ll never get invited to dinner again. But if you have homeowner’s insurance, the good news is that legal and medical expenses are likely covered.
Is property insurance worth it? Absolutely! The premium you pay is usually a very small percentage of the potential financial hit you take from that curve.
Homeowners Insurance
Home insurance is probably the most well-known type of property insurance. And that’s a good thing, because your home is probably one of your biggest investments – and it needs protection!
What Is Home Insurance?
Home insurance is financial protection for your home against losses due to disasters, theft and accidents. It also protects your belongings and provides liability coverage.
Why Do You Need Home Insurance?
Your home is more than just a house. Not only could it be your biggest investment, it’s also your special place to store things like that antique clock your mom gave you. If the clock is destroyed by fire, homeowner’s insurance won’t mitigate the loss of the clock’s sentimental value, but the right policy will help you buy a new one.
What does home insurance cover?
Standard homeowners insurance covers loss and damage to the structure of your residence, along with furniture and other assets. It also provides liability coverage for accidents that happen inside your home or on your property.
Here’s how it works. When you file a claim, you will have to pay a deductible and the insurance company will pay the rest.
For example, let’s say the hardwood floor in your home is ruined by a burst water pipe. If the cost to replace the floor is $10,000, you can file a claim against your insurance policy. If the claim is approved and your deductible is $3,000, the insurance company will pay the remaining $7,000. Yuck!
Keep in mind, though, that homeowners insurance can be complicated about what it does and doesn’t cover. It’s a great way to protect your assets, but it won’t pay for everything. Consult with a local trusted provider and take a close look at potential gaps.
Condo/Co-op Insurance
Whether you call your apartment home or it’s your home away from home, it’s an investment that needs insurance protection. But apartments and houses have significant differences, so they require different types of insurance coverage. Let’s go over the basics.
What Is Apartment Insurance?
Condo insurance is purchased by a condo owner to provide financial protection in the event of loss and repair of the condo unit they own.
Why Do You Need Apartment Insurance?
Many condo owners don’t realize that their condo and personal property are not covered by their condo association (aka HOA). HOA insurance typically focuses on the structure of the building and common areas. However, condo owners are responsible for coverage for the specific unit they own.
All owners of smart apartments must purchase apartment insurance. The right policy will provide you with financial compensation (after paying your deductible, of course) so you can continue building your nest egg.
What does apartment insurance cover?
Here’s a summary of what condo insurance typically includes:
Personal Liability: If someone is injured in your apartment, liability coverage will help you pay for related legal and medical expenses.
Structural Protection: If the walls (interiors or exteriors) of your dwelling unit are damaged by a covered peril, property protection coverage helps you pay for repairs.
Personal Property: If your belongings (electronics, appliances, furniture and clothing) are stolen or damaged, home insurance will help you pay to repair or replace them.
Landlord’s Insurance
If you own a property and rent it out to tenants, you need landlord insurance. It doesn’t matter if your tenants are friends, relatives, or your ex-spouse, you still need landlord insurance.
What Is Landlord Insurance?
Landlord insurance protects you legally and financially from damage or injury related to the rental property you own.
Why Do You Need Landlord Insurance?
Whether your rental property is damaged in a hurricane or your tenant in Apartment 4B had an accidental kitchen fire and claims they are not responsible, landlord insurance is essential to protecting your property from events that are completely out of your control.
What Does Landlord Insurance Cover?
Landlord insurance covers at least three basic protections: property damage, liability and lost rental income.
Remember when we said we’d mention the types of insurance that deviate from typical coverage (structural, personal items, liability)? Well, this is one of them.
First, compensation for lost rental income is not covered by other types of policies. Another thing to be aware of is that renter’s insurance does not cover the renter’s personal belongings. It is up to the tenant to purchase landlord insurance if they wish to receive compensation for damage to their belongings.
But wait, before we get into renters insurance, you should know more about landlord insurance. Depending on the location and condition of the rental property you own, you may want to consider additional coverage that can cover things like construction costs, commercial property, flood insurance, earthquake insurance, water backups, and vandalism.
For example, if your rental property is in a high-crime area, you may want to consider adding vandalism protection to your policy.
Renters insurance
Most tenants think that if something happens to their belongings or guests inside their rental property, they will be covered financially by their landlord. No, that’s not true. It is up to the tenant to purchase insurance.
What Is Renters Insurance?
Renters insurance provides coverage for the tenant’s (or subtenant’s) property and liabilities. Anyone renting (or subletting) a detached house, flat, maisonette, flat, studio, loft or townhouse can purchase renters insurance.
Why Do You Need Renters Insurance?
Imagine this. After months of saving, you’ve finally bought yourself a new 65-inch 4K Roku Smart TV. You’ve been enjoying it for weeks when you notice a water stain on the ceiling where water has been dripping onto the top of your new TV all day while you’ve been at work. You hold your breath, turn on the TV and . . . nothing. Time to panic?
Not if you bought renters insurance.
What Does Renters Insurance Cover?
Renters insurance covers damage to tenants’ personal belongings caused by fire, smoke and water that occurs inside the rental property. It also provides liability coverage if someone is injured in the property you are renting. So that fancy TV you bought that now displays multiple channels with distorted static electricity is covered. You’re also covered if your friend slips on a puddle that collects from the water droplets that bounced off your TV. Gentlemen!
Mobile home insurance
Before we talk about the basics of mobile home insurance, let’s clarify the difference between standard single-family homes and manufactured homes. It’s pretty simple: Standard homes are built on site, while a manufactured home is delivered as a complete structure.
What Is Mobile Home Insurance?
Mobile home insurance is manufactured home insurance. It includes any dwelling that falls under the definition of a manufactured home.
Why Do You Need Mobile Home Insurance?
Although manufactured homes are generally much less expensive than the average single family home, it is still very important to have insurance. That’s because mobile home insurance protects your investment and prevents you from having to pay out-of-pocket for repairs or replacements.
What Does Mobile Home Insurance Cover?
Mobile home insurance, like standard home insurance, covers liability claims, the home itself and your personal belongings.
Most of the same coverage options that are included in home insurance are also included in mobile insurance. The main difference between these two types of policies is how insurance companies determine the value of your home.
With mobile home insurance, the insurance company uses actual cash value to assess the value of your home (what your home is worth at the time of damage). In the case of a homeowners policy, insurance companies determine the value of your home based on today’s replacement costs (reconstruction using the same materials, same quality, same location).
Flood insurance
Flood insurance can help mitigate the trauma caused by floods. Let’s go over some basics.
What Is Flood Insurance?
Flood insurance is an additional layer of protection that covers the home for flood losses caused by heavy or prolonged rains, melting snow, coastal storm surges, blocked drainage systems, or levee levee failure.
Flood insurance is different from the basic perils typically included in homeowners insurance (for example, water damage from a burst pipe or an overflowing toilet). Flood insurance, on the other hand, provides coverage for water damage caused by a rising body of water that covers normally dry land. Flood insurance is not a common part of home insurance and must be purchased separately.
Why Do You Need Flood Insurance?
There are many reasons why you might need flood insurance to protect your investment.
As a general rule, any residence that is prone to flooding due to surrounding landforms (think Katrina), soil type, or weather must be protected by flood insurance. If you own property in a neighborhood that is a federally recognized floodplain, you are required by law to purchase flood insurance.
But floods can be very unpredictable. That’s why, even if you don’t have to buy it, it’s still a good idea to at least look into flood insurance so you know you’re covered no matter what.
What Does Flood Insurance Cover?
Flood insurance is another type of property insurance that is different from most others. It only helps cover physical damage to your home and belongings after floods or related losses from rising water. The amount of cover and compensation you get depends on what is specifically stated in your policy.
It is so important to remember that flood insurance is not included in your home insurance. If you’re new to this, you’re not alone—most people need help understanding flood insurance.
If you live in a coastal area where hurricanes are common, it’s a good idea to combine flood insurance with wind insurance. Wind damage is usually covered in homeowners policies, but it may not be if you live in a hurricane-prone zone and your property is damaged by a hurricane. We recommend that you speak to your insurance agent to ensure that you have the correct coverage.
Earthquake insurance
You don’t have to be a California property owner to consider earthquake insurance these days. Twenty-three percent of homeowners nationwide who had homeowners insurance in 2020 said they also had earthquake insurance.1
What Is Earthquake Insurance?
Earthquake insurance provides protection against shaking and cracking that can destroy buildings and personal property. Earthquake damage is usually not covered by standard homeowner’s policies.
Why do you need earthquake insurance?
Earthquake activity is becoming more frequent. According to the US government’s National Oceanic and Atmospheric Administration, the overall trend in annual high-intensity earthquake activity is increasing significantly.2
Earthquake insurance is not required by law, and most mortgage lenders do not require it. But if you live in an area historically prone to seismic activity and want to protect your nest egg (who doesn’t?), earthquake coverage is a smart buy.
What Does Earthquake Insurance Cover?
Earthquake insurance covers three things: damage to your home, damage to your personal belongings, and other living expenses if you need to relocate temporarily after an earthquake.
But temporary living expense reimbursement is different from standard property insurance, right? Yes! Earthquake insurance is the last (we promise!) to break out of the standard three types of coverage (buildings, personal items, and liability).
The dollar amount of earthquake coverage you purchase depends entirely on your situation, so get advice from an insurance agent to get the right coverage.
Ensure your assets are protected
Property insurance has many twists and turns and can be difficult to understand. You don’t have to try and figure it out on your own.
If you’re ready for a real sense of security (not made up – sorry Linus) but aren’t sure how to get there, contact one of our Trusted Local Providers (ELPs) who can find you the best property insurance for your situation.
