How and from what can property be insured against?

Written By O. Love

In one famous song, which goes by: “If you don’t have a home, fires are not afraid of it.” This, perhaps, is too radical a solution to possible problems with property. But if you “thought for yourself and decided for yourself” that you still need a house, and with it a dog, a car, new repairs and many other things, then insurance will help minimize possible losses.

What can be insured?

You can insure any property that you own. This can be real estate, and household appliances, personal vehicles, and furniture, and even your favorite pet (according to law in some countries, your pet is considered property).

There are only two conditions for insurance:

  1. You have ownership of the property you wish to insure.
  2. You can determine the value of this property in order to adequately assess the size of the insurance payment.

Property insurance is voluntary. That is, you, as the song says, really “think for yourself and decide for yourself” whether you need this policy. But in some cases, without insurance, you will not be able to get a loan. For example, property insurance may be a mandatory clause in a mortgage agreement.

You can also insure your right to any property. This right is also called a title, hence the name of this type of insurance – title. Such policies can be useful to you when buying real estate.

For example, you buy an apartment and are afraid that the seller will turn out to be a fraudster or one of the previous owners or relatives will challenge its ownership. This means that there is a risk of spending a lot of time and effort on litigation and, as a result, being left without a new home and without money. Title insurance will help protect yourself in such cases.

Surprises can await not only with secondary housing, but also with a new building. There are cases when an unscrupulous developer sells the same apartment to several buyers at once. Title insurance will allow you not to lose money in this situation.

What risks can property be insured against?

Most often in our country, property is insured against fire, flooding or theft. But among the insurance risks there may be others – for example, natural disasters, explosions or plane crashes.

Some insurers make a complete list of cases in which you will receive insurance compensation. This method is called named risk insurance. All cases not included in this list are not considered insured.

Another method is called all-risk insurance. The insurer lists the situations and risks in which the insurance indemnity will not be paid. All other incidents are covered by the insured event. Before buying a policy, be sure to find out what approach the company uses.

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Each insurance company defines the boundaries of the insured event in its own way, and this should also be taken into account. For example, when insuring home property against fire, a fire that occurred due to a short circuit or problems with household appliances may not be considered an insured event.

Flood insurance can only cover a domestic situation – for example, when a pipe burst in a house. But floods and spills, which can also cause flooding, are more often classified as natural disasters, and this is a separate clause in the contract. If your insurance does not cover such an event, you will not receive a payment.

All details must be spelled out in the contract and in the appendix to it – in the rules of property insurance. Do not rush to sign documents until you carefully study the conditions under which you can receive a refund.

 

In what cases can you not receive an insurance payment?

Obviously, they will not give money if your case is not in the insurance contract or it is included in the list of exclusions from insurance coverage. There will be no payout if the company proves that you deliberately damaged the property.

It will not be possible to obtain insurance from two companies at once – the system has protection against the so-called double insurance. If you have entered into two contracts, then the insurance payment of the company will be divided among themselves. You will not be given more money than your property is worth (this value is always prescribed in the contract).

By the way, about the value of the property. If the insurance company proves that you deceived it and indicated an overestimated value of the property, then the contract may be invalidated (then you will not receive money at all) or this clause may be rewritten (and you will receive a smaller amount).

How to conclude a property insurance contract?

Choose a reliable company. Be sure to check if they have a license from the appropriate authority of your country for voluntary property insurance. You can find a list of licensed companies in publicly available online Directories in your country.

Read all the terms of the contract carefully. Compare the conditions offered by different insurance companies. Be sure to specify:

  • what the company considers an insured event;
  • what insurance risks are covered by the policy;
  • what situations are excluded from insurance coverage;
  • What documents will be required to provide in the event of an insured event.
Find out how the insurance premium is calculated. 

The amount that you will be paid if an insured event occurs is necessarily prescribed in the contract. And according to the law, it cannot be more than the actual or market value of the property at the time of the conclusion of the contract. Be sure to check this point: if you overpriced, the insurance company will be able to challenge it. 

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Underestimating the price of property is also not worth it – this way you will receive less money from insurance than is required to compensate for damage. You will not be able to dispute this clause after signing the contract.

Not in all cases, the insurance company fully reimburses the cost of lost property. The amount of the payment may depend on what kind of insured event has occurred and whether it is possible to restore the property or not.

Find out if you can use the franchise. 

The deductible is the part of the damages that you are willing to take on. Deductible insurance will allow you to save on the price of the policy. But if an insured event occurs, then the payments may be less. Everything will depend on the scale of the insured event and on the terms of the franchise.

Franchise is conditional and unconditional.

With a conditional deductible, you divide insured events into small and large in terms of the amount of damage. Say, if the loss is up to $110, you see no reason to contact the insurance company. You can manage these expenses on your own. If something serious happens and the cost of damage exceeds this limit, you would like the insurance company to compensate you for the losses in full. Then a conditional franchise will suit you, while you can choose the limit that suits you.

With an unconditional deductible, the contract prescribes the amount of losses (the amount of the deductible), which in any case you will have to compensate yourself. The insurer will only pay if the damage is greater than the amount set. Moreover, he will pay the difference between the full amount of damage and the deductible. For example, if the size of the unconditional deductible is $4,000, and the losses are estimated at $20,000, then the insurer will pay $16,000.

An unconditional deductible can be not only a fixed amount, but also a percentage of the amount of damage. For example, a 10% deductible may be specified in the contract. In this case, you always take 10% of the costs for yourself, and the remaining 90% is compensated by the insurance company.

In any case, it is worth considering: when it makes sense to save on the price of the policy, and when it is better to pay for insurance without a deductible and not worry about unplanned expenses if an insured event suddenly occurs.

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Pay attention to the duration of the contract. 

Typically, property insurance contracts are concluded for a year, then their fate depends on the conditions prescribed in them. There are contracts that automatically renew if you just keep making premiums.

What documents are needed?

Not so many documents are needed to apply for insurance:

  • a passport;
  • a document confirming your ownership of the property or your property interest, such as a purchase agreement;
  • application (the form is usually provided by the company itself).

In some cases, the company may ask you for a certificate of state registration of real estate, an extract from the Unified State Register of Real Estate, or a building permit.

Please note that it is not always necessary to have title deeds. For example, you can insure property in an apartment where you are simply registered. You can even insure things in the apartment that you rent under the contract. However, keep in mind that the apartment itself is not insured. In addition, it will be possible to insure only those things in the apartment that belong to you (and you can prove this if an insured event occurs).

The insurance contract can be concluded in writing or electronically on the official website of the insurer.

How to get an insurance payment?

If an insured event occurs, immediately report it to the insurance company. Your contract may specify the period during which you must inform the insurer about the incident. If you are late with your message, the company has the right to refuse to pay you insurance.

Also, immediately call a service that can register what happened, for example, the Ministry of Emergency Situations, a management company, the police, the traffic police.

To receive an insurance payment, you must provide a valid insurance policy, a receipt for payment of premiums and documents in which an insured event is registered (for this, the services and the insurer are called).

If the company did not pay you insurance on time and did not give a reasoned refusal, you can file a complaint. In addition, you have the right to demand that the insurance company pay interest for the delay in insurance – for this you will need to go to court.

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