Insurance protects properties against natural disasters and other eventualities. Unfortunately, insurance, regardless of the type, isn't really appreciated until it's needed. The decision to have property insurance, health insurance, car insurance, maternity insurance, etc. depends on each person's risk tolerance and needs.
What Does Insurance Protect Me Against?
There are different types of policies. Some of the most important are related to:
• The internal and/or external structure of the property
• Personal belongings inside the property
• Damage to third parties (accidents that happen inside the property)
• Damage to other properties (in the case of condominiums)
What Type of Insurance do I Need?
There are many types of insurance and not all owners need the same type of policy and coverage. It’s best to specify the policy and its coverage, as well as its restrictions and exclusions, to cover possible risks. The most important factors to consider when deciding on the type of policy and its coverage are:
•Use of the Property: Investment, renting, vacation or primary home.
•Liability: Protects against legal action and medical expenses should someone get injured on the property.
•Protection against damage to other properties: Personal belongings and the interior of the property (e.g., floor, walls, ceilings, electrical installations, appliances, or air conditioning)
•Location: Typically, a separate policy is required by the government and lenders if the property is in a flood zone or hurricane-prone area.
•Type of Property:
◦ House and Townhouse – Usually, this type of property is suitable for structural protection, flooding, accidents, and hurricanes.
◦Condominium - Buildings usually have a master policy that covers the structure and common areas against floods and accidents.
•Number of Properties: If you own multiple properties, you have the option of using what is called an “umbrella” insurance that allows you to reduce the cost of the policy.
Ways to Reduce the Cost of Your Insurance Policy
Increase your deductible. As an owner, you can save money if you increase your insurance deductible. This is the amount the policy holder pays before the insurance covers a claim. This is one of the most common ways of keeping insurance costs low. Remember that a high deductible is a great way to save money if you have the money to pay the deductible, when necessary.
Wind proof your home. High impact doors and windows can greatly discount your policy premium.
Install an effective alarm system. Insurance companies give discounts if you have an alarm system.
Pay off minor accidents on your own. Frequent claims are key factors that insurance companies consider when setting higher insurance premiums.
Check your home elevation and flood zone. An Elevation Certificate is an important tool that documents your building's elevation. If you live in a high-risk flood zone, you should provide an Elevation Certificate to your insurance agent to ensure that your premium accurately reflects all applicable discounts. Most importantly, if your property is located within the X flood zone, you are most likely not required to carry flood insurance at all.
REMEMBER to hire the services and advice of an insurance broker when purchasing your property to ensure you get the coverage that best meets your situation.