Property Insurance Basics

Property insurance is needed by anyone who owns their own home and is obtained by purchasing a homeowners insurance policy. A homeowners insurance policy provides protection from loss by providing coverage for contents, liability and replacement cost. Other coverages can be added or removed by adding an endorsement to the policy.

A homeowners policy provides a type of property insurance that covers the contents of a home or dwelling from a loss. A loss can result from a peril such as fire as well as theft. The limits for this coverage can be calculated or determined in a couple of different ways. Usually, the coverage for contents is the sum of all items within a dwelling or home. The amount of contents coverage depends on the amount of property that is in the home and other outbuildings. The contents coverage limits on a personal property or homeowners policy are the maximum amount the insurance company will pay in the event of a loss.

A homeowners insurance policy also provides property insurance by including coverage for liability on the policy. Liability coverage on a homeowners policy is generally designed to do a couple of important things. First, it provides for medical payments in the event that someone becomes injured while on the insured’s property. This can be a friend, relative or someone just visiting the residence. Second, it provides coverage for legal expenses in the event that the insured is sued as the result of an injury or some other event. Liability insurance generally does not cover negligence and carelessness on the part of the insured.

The best type of property insurance that comes with a homeowners policy is coverage for the replacement cost of the dwelling. The amount of coverage is generally based on the replacement cost value of the dwelling and not the actual appraised value of the house. It is important to remember the replacement cost of a home is not the same as its appraised value. This is because it will cost more to completely replace a home after a loss. In order for the replacement cost coverage on a homeowners policy to be of any benefit the home needs to be insured to its full replacement cost value. The last thing anyone wants in the event of a loss is to be under insured.

In the event that changes need to be made to a homeowners policy to either add or remove a specific coverage a policy needs to be endorsed. An endorsement is basically an addition to an existing policy that can be made without needing to re write an entire policy. An endorsement is an easy and reliable way to make changes to a homeowners policy.