Property insurance plans cover a diverse range of properties, including everything from vacant land and remote cottages to multi-unit condominium buildings and commercial structures. These insurance plans have many different features and nuances as a result, but they all follow the same basic structure. Here's how to understand the structure of a property insurance plan.
Structural Coverages: For Improvements
The structural coverages in a property insurance plan are the coverages that actually insure the improvements made to a piece of land. Improvements refer to any building or other permanent structure, which may include a fence, shed, booth, or other outer structure depending on the specific type of property plan.
All property plans except those that are underwritten for vacant land will have structural coverage for a main structure, such as a house or commercial building. Many plans will also offer structural coverage for secondary structures, but this latter feature is usually optional.
One important note on the structural coverages in a property insurance plan is that they don't cover earthquakes or floods. Many other perils are covered, but a separate earthquake insurance plan or flood insurance plan must be purchased if you want protection against these risks.
Contents Coverages: For Possessions
The contents coverages in a property insurance plan protect the possessions that are kept on the insured property.
Contents coverage is commonly called personal property coverage for personal property insurance plans, such as homeowners plans. Personal property coverage may protect items such as furniture, clothes, electronics, jewelry, books, dishes, and other possessions that individuals have.
With commercial plans, it's referred to as commercial contents coverage. Commercial contents coverage will normally protect furniture, electronics, and books, as well as equipment, inventory, and supplies.
With both coverages, the exact protections of a particular plan depend on that policy's terms and conditions.
Sometimes contents coverages will extend protection beyond the boundaries of an insured property. When policies provide contents coverage beyond an insured property, their coverage is worldwide.
Liability Coverage: For Lawsuits
Personal property insurance plans, which include homeowners, renters, condo, and vacant land insurance plans, include personal liability coverage. This coverage offers financial assistance with certain liability lawsuits that the policyholder could face. The coverage will help pay legal costs and settlements associated with a covered lawsuit.
Commercial property insurance plans don't include liability protection. Because businesses face such different liability risks, commercial liability coverage is purchased through liability-specific policies.