Property insurance is a comprehensive term used for a list of policies that provide either assurance coverage or liability coverage for property owners. This coverage policy provides financial reimbursement to the owner or renter of a structure and its contents in case there is damage or theft—and also covers persons other than the owner or renter if they are injured on the premises.

What does a Property Personal Insurance Policy cover?

Property insurance includes a number of policies, such as homeowners insurance, renters insurance, flood insurance, and earthquake insurance. Personal property insurance is usually covered by a homeowners or renters policy. The exception is that personal property is very high value and expensive—this is usually covered by purchasing an attachment to the policy called a “rider”. If a claim is made, the policy either compensates the policyholder for the actual value of the loss or the replacement cost to fix the problem.

There are three sorts of property insurance coverages; replacement cost, actual cash value, and extended replacement costs.

  • Replacement cost coverage pays the value of fixing or replacing property at the same or equal value. The coverage usually depends on replacement cost values rather than the cash value of items.
  • Actual cash value coverage pays the owner or renter the replacement cost minus depreciation value. If the destroyed thing is 10 years old, you get the value of a 10-year-old item, not a brand-new.
  • Extended replacement costs help to pay more than the coverage limit if the costs for construction have gone up. However, this normally won’t exceed 25% of the coverage limit. When a person buys an insurance policy, the coverage limit is the maximum amount of benefit the insurance company has to pay for a given situation or occurrence.