Property Insurance
What Does Property Insurance Mean?
Property insurance covers damages to valuable assets such as a house, car, boat, or personal belongings. When a person purchases property insurance, they pay premiums throughout the year to maintain active coverage. If their property is damaged or lost, the insurance company will cover the cost of repairs or replacement.
Property insurance has a maximum coverage limit, which is the highest amount the policy will pay for damages. For example, if a homeowner buys a policy with a coverage limit of $500,000 and their house, worth more, burns down, they will need to pay for the damages exceeding that limit themselves. To increase their coverage, a policyholder can opt for a higher premium.
Insuranceopedia Explains Property Insurance
Property insurance policies do not cover all risks; the risks that are not covered are known as exclusions. For instance, many homeowner’s insurance policies do not cover damages caused by floods. Policyholders need to be aware of these exclusions to avoid unexpected surprises.
Additionally, property insurance does not cover financial losses from lawsuits related to the property. This type of coverage falls under casualty insurance. As a result, most insurance policies combine both property and casualty insurance. For example, if a person with car insurance is involved in an accident, the property insurance portion would cover the repair costs for their car, while the casualty insurance would protect them in case they are sued by another driver.
