Property insurance is considered to be a reimbursement policy that protects the owner’s property from possible damages and risks (natural disasters, terrorist attacks, housefires etc.). It incorporates various forms that range from earthquake to homeowner’s insurance and is usually carried out as a voluntary act. The insurance policy may be taken out by regular people, enterprises, and organizations of different legal forms. When insuring the property, the exclusions and the inclusions are taken into consideration. The exclusion method implies the set of loss causes mentioned in an insurance policy according to which the reimbursement is not paid out. Whereas the inclusive method involves mentioning those loss causes at which the insurance recoveries are provided.
There are two kinds of property insurance: owner insurance and renter insurance. Owner insurance is coverage of the actual building which tends to be of a higher cost and normally has liability coverage. It is usually required when there is a mortgage on the property. Renter’s insurance, in its turn, also has liability coverage, tends to be of a lower cost and covers personal property. In this case, a landlord is the one to insure the actual structure. The main benefits of the property insurance are: financial protection of the investment, a good policy for low monthly payments, reducing the possible stress from the lack of finances, timely recovery provided by the insurance.
In order to obtain the property insurance, one needs all the information and documents required and, what is more, an assurance to cover the entire cost of rebuilding and furnishing the property. The next step after having decided on how much insurance is necessary is finding suitable coverage. Property insurance can be covered by actual cost value coverage, replacement coverage or extended replacement costs. The guaranteed replacement coverage obliges the insurance company to pay for the property to be rebuilt in case of the damage, regardless of the appreciation or depreciation. Nowadays, this type of reimbursement is getting harder to find. The extended replacement coverage guarantees that the insurance company will pay the cost of rebuilding the property to the policy amount that was agreed upon, plus an extra 25% to 200% of the policy account amounts. Actual cost value coverage pays for the rebuilding with the depreciation cost deduction. There is also an option to find coverage that provides and pays for the living arrangements of people who can’t stay in their homes due to the severe damage caused to their dwelling.
There are multiple accounts when the intentional damage or destruction of the insured property is done by its owners with the purpose of making more money out the insurance reimbursement. Such actions fall under the definition of property insurance fraud. Owners usually tend to commit arsons and engage in other destructive activities to get rid of not only their property, but of any evidence of the fraud. Although it seems relatively easy to get away with this crime, the perpetrator, if caught, faces serious charges and may be sentenced to up to seven years in prison.