Definition - What does Property Insurance mean?
Property insurance covers the damages to valuable assets like a house, car, boat, or personal belongings. When a person buys property insurance, they pay insurance premiums throughout the year to keep their coverage active. If their property is damaged or lost, the insurance company will pay to repair the damages or replace the property.
Property insurance comes with a maximum limit of coverage. This is the most the policy will pay to cover damages. A person might buy a homeowner’s policy with a maximum of $500,000 of property insurance. If their house is worth more and burns down, the homeowner will need to cover the damages above their policy limit themselves. A policy owner can buy a larger amount of property insurance coverage by paying a higher premium.
Insuranceopedia explains Property Insurance
Property insurance policies don’t cover all risks. The risks that aren’t covered are called exclusions. For example, many homeowner's insurance policies won’t cover damages from floods. It’s important for policy holders to be aware of these exclusions so they won’t get caught off guard.
Property insurance also does not cover the financial losses from lawsuits caused by the property. This is another type of insurance known as casualty insurance. As a result, most insurance policies include a mix of both property and casualty insurance. For example, if a person with car insurance gets into an accident, the property insurance side of their coverage would pay to repair their car while the casualty side of their insurance would cover them in case they were sued by another driver.