Types of Property Insurance

What does Homeowners Insurance cover?

A homeowners insurance policy is a set of coverages that can protect your home and belongings against damages that occur because of certain hazards. For example, if you’re a victim of a fire or burglary, homeowners insurance will help pay for costs related to the destruction and other losses. In addition, a home insurance policy may also help cover costs if you accidentally damage another person's property or if a visitor is injured at your home.

Types of Homeowners Insurance

• Dwelling Coverage: This portion of your policy pays to replace the structural components of your home in losses such as damage caused by wind, hail, lightening or fire. (Separate policies are needed for flood and earthquake insurance.) Other Structures that are protected include detached garages and other buildings on your property. Usually, the coverage for these is 10% of your dwelling coverage, but higher amounts can be purchased.
• Personal Property: This coverage is included in a standard home insurance policy and helps pay for the replacement of your personal items and household contents in the event they are stolen or destroyed by fire or other hazard.
• Loss of Use: When you can’t live in your home due to a covered loss, this coverage provides for your living expenses. This type of coverage typically covers hotel bills, restaurant bills and other living expenses you may incur while your home is being repaired.
• Personal Liability: If a visitor to your home is injured while on your property, this coverage helps protect you if a lawsuit is presented against you or covered family members.
• Medical Payments: This coverage helps pay for medical expenses that you might be held responsible for due to an injury sustained on your property when there is no lawsuit.
• Home Liability Insurance: Home liability insurance is standard on all home insurance policies and costs nothing extra for the basic policy limits. You can raise the basic limits of your home insurance liability coverage for an extra premium if you need more protection. The amount of home insurance liability coverage you need on your policy really depends on your lifestyle, your finances and your comfort level. Even if you think you are a careful person and you keep your home safe for your guests, you should still have liability coverage. Homeowners liability insurance not only pays for things that happen on your property, but also things that happen off your property.

What does Renters Insurance cover?

Renters insurance protects your personal belongings, allowing you to recover damage and loss, including from theft, fire, and even smoke, which can be very destructive. It will also cover the cost of temporary housing if your apartment or rental home becomes uninhabitable following a loss like a fire. Renters insurance provides personal liability coverage in case someone gets injured inside your apartment or if you cause damage to other renters’ apartments.

Your landlord’s insurance does not cover your personal belongings. A landlord’s homeowners or landlord insurance covers the structure of the building, any personal property the landlord owns (like appliances and carpeting) and liability for injuries due to the property owner’s negligence in upkeep or safety of the property.

Renters insurance is not mandatory in any state, but some landlords require tenants to buy renters insurance especially if you live in an apartment building or other type of multi-unit rental.

Why you should consider Renters Insurance

Some renters feel that insurance is an unnecessary expense. But even if you don’t have a lot of expensive belongings, if you take the time to write down an inventory and an estimated value of everything you own, you might be surprised.

List everything, including all your furniture, clothes, dishes, electronics, jewelry, appliances, and even cosmetics. Now add up how much it would cost to start with nothing and replace every single thing you own. That is exactly what you would have to do if a fire or natural disaster caused you to lose everything.

Condo Insurance

Traditional homeowners insurance provides coverage for damage to the structure of the home and its contents. In the case of a condominium, the condo association will have a master policy that covers damages to the structure of the building and to the common areas. This policy also provides liability coverage for injuries that occur in common areas or on-site facilities such as a gym or swimming pool.

Thanks to these master policies, condo owners is can usually get policies that are less costly than typical homeowners insurance policies.

Condo insurance, also known as HO-6 insurance, is designed to protect a condo owner from damages and loss due to burglary, fire or other incidents, as well as personal liability in the event that someone is injured within your home. Most mortgage companies require you to buy condo insurance and remain covered for the life of your loan.

What’s covered by Condo Insurance?

Condo insurance provides coverage for damages that occur within your unit, including interior walls, flooring and ceilings, as well as for your personal property. If you have losses due to theft or property damage caused by hazards fire, water damage or wind, you could receive compensation through your condo insurance.

Your condo insurance also protects you against liability claims. If a guest is injured while in your home and you are held liable, your condo insurance can cover some portion of their medical bills. If you are sued, most policies will also provide coverage for court costs and legal fees.

How much Condo Insurance do I need?

The best way to assess your coverage needs is go through your home and write a detailed list of all your belongings, as well as how much it would cost to replace them.

It is typically recommended to have a large amount of liability insurance. If someone is hurt in your home and your liability insurance is not enough to cover all the medical costs, you would be responsible for the remainder of the medical costs out of pocket.

An increased liability limit or an umbrella policy can provide the additional protection you need if you find yourself in an expensive legal situation.

Basic Landlord Insurance Coverage (Rental Home/Dwelling Fire insurance)

This is homeowners insurance for landlords. Like homeowners insurance, your policy will cover the structure in the event that it is damaged due to storms, fire or malicious acts. The policy will also provide liability protection to cover injuries to anyone on the premises in the event that these injuries are deemed to be your fault or the result of negligence on your part.

One key difference between homeowners insurance and insurance for landlords is that you typically don’t need to insure personal property. Because your tenants are responsible for insuring their own belongings with Renters Insurance, the only property you need to cover within the units are the things you own, like appliances and carpeting.

However, you’re leasing a furnished home or apartment, you do need to cover the belongings in the leased space.

Additional Coverages for Landlords

A basic policy will cover most of the typical problems and claims you may face as a real estate investor and landlord, but there are some additional types of coverage you might consider:

• Legal Fees: Legal fees alone can be enough to put a landlord out of business. Your liability coverage is designed to help you cover the cost of litigation.
• Loss of Rent: This coverage will help you replace your rental income if your building becomes uninhabitable due to fire, flood, or damage caused by a tenant.
• Umbrella Liability: An umbrella policy can provide broader liability coverage with higher limits to help cover unforeseen bodily injuries, property damage and legal claims.
• Natural Disaster Coverage: Some but not all types of storm damage may be included in your landlord insurance policy, however flood and earthquake coverages are not included automatically.