Monday, October 12, 2015

Property Insurance - Types & Coverage

Property insurance provides protection against risks to property, such as fire, theft, terrorist and other damages.

It also includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, plumber repair insurance or boiler insurance.

Types of Property Insurance Coverage

1. Replacement cost coverage pays the cost of repairing or replacing your property with like kind & quality regardless of depreciation or appreciation. Premiums for this type of coverage are based on replacement cost values, and not based on actual cash value.

2. Actual cash value coverage provides for replacement cost minus depreciation. Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 25% of the limit. When one obtain an insurance policy, the coverage limit established is the maximum amount the insurance company will pay out in case of loss of property. Actual Cash Value will fluctuate if the cost to replace homes in your neighborhood is rising; the amount needs to be in step with the actual reconstruction value of the home. In case of a fire, household content replacement is tabulated as a percentage of the value of the home. In case of high-value items, the insurance company may ask to specifically cover these items separate from the other household contents.

3. One last coverage option is to have alternative living arrangements included in a policy. If a fire leaves your home uninhabitable, the policy can help pay for a hotel or other living arrangements.

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