Buying property insurance is a great way to secure the longevity of your property. Going without insurance is a huge gamble that a lot of people engage in especially in Nigeria. The role insurance plays are very crucial and cannot be undermined. Having a property insurance is one of the best decisions you can make as a property owner.
In this article , we’ll explore concept of property insurance, benefits, and essential factors to consider when choosing a property insurance policy.
What is Insurance
Insurance is a risk management contract or arrangement against financial losses. An insurance contract is entered into before a financial loss occurs, else it is not insurance. It is a future purchase of protection against unforeseen or perhaps anticipated incidents customary to business or endeavour. When a claim of insurance matures, the insurer pays the insured or anyone chosen to collect the agreed payment for the financial loss encountered. There are various types of insurance or insurance policies a person can buy. They range from life insurance to property insurance. However, this piece will focus on property insurance.
Property insurance essentially shields property owners from financial losses on the property and or the assets it houses, or those surrounding it. Property can simply be anything capable of being owned. While there’s little jurisprudential nature in support of insurance of intangible properties like intellectual property for example, legal literature is replete with the insurance of physical properties both animate and inanimate. Thus we have property insurance ranging from building insurance to car insurance, art insurance all the way down to mobile phone insurance.
Types of Property Insurance
There are several types of property insurance policies available, each with different coverage options and premiums. For the purpose of this article, we’ll be discussing 4 most common types of property insurance in Nigeria as related to housing. They include :
• Homeowners Insurance
Homeowners insurance is a type of property insurance that covers damages and losses to a home and its contents. This type of policy typically covers damage from fire, wind, hail, and other natural disasters, as well as theft and liability.
• Renters Insurance
Renters insurance is a type of property insurance that provides coverage for renters’ personal property and liability. This type of policy typically covers damage from fire, theft, and other covered events.
• Flood Insurance
Flood insurance is a type of property insurance that provides coverage for damage caused by floods. This type of policy is typically required for properties located in flood-prone areas.
• Commercial Property Insurance
Commercial property insurance is a type of property insurance that covers damages and losses to commercial properties and assets.
• Builder’s Risk Insurance
Builder’s risk insurance is a type of property insurance that provides coverage for buildings under construction. This type of policy typically covers damage from fire, theft, and other covered events during the construction process.
The insurance contract you make with an insurance company is known as an insurance policy. This document contains all the terms and conditions agreed upon in the insurance contract. A monthly payment is made by an individual or business to service this contract. This is called an insurance premium. Essentially, when a person buys an insurance policy, they first of all pay, then continue making a periodic payment called premium.
Benefits of Property Insurance
Sense of Security – Having a property insurance protection against the uncertain risks of loss such as fire, natural disaster, theft, gives you a peace of mind and confidence as the owner of the assets. And if these risks occur and you suffer loss, the insurance company will surely give the appropriate compensation.
Compensation for Damage or Loss of Property – Property insurance offers compensation for any damage or loss of your property. The term for compensation is that the loss is not caused by your own negligence.
Factors to Consider When Choosing a Property Insurance Policy
Choosing the right policy for your needs can be a challenging task.
1. Determine Your Insurance Needs
Before you start shopping for property insurance policies, it’s important to determine your insurance needs. This means assessing the value of your property, your location, the risks your property faces, and the coverage you require. For instance, if you live in an area prone to floods, you might want to consider purchasing flood insurance in addition to a standard property insurance policy.
2. Shop Around
Once you know what you’re looking for, it’s time to shop around. There are many property insurance policies available, each with different levels of coverage, premiums, and deductibles. It’s important to get quotes from several insurance providers and compare their policies to find the best option for your needs.
3. Read the Fine Print
When you’re reviewing insurance policies, it’s important to read the fine print. This means paying close attention to the coverage limits, deductibles, exclusions, and terms and conditions of each policy. Understanding what your policy covers and doesn’t cover is essential to ensure you have the protection you need.
3. Consider the Premiums and Deductibles
When comparing insurance policies, it’s important to consider the premiums and deductibles. The premium is the amount you pay each month or year for your insurance policy, while the deductible is the amount you’ll pay out of pocket if you make a claim. Generally, policies with higher deductibles have lower premiums, while policies with lower deductibles have higher premiums. It’s important to find a balance between the premiums and deductibles that works for your budget.
4. Look for Discounts
Many insurance providers offer discounts on their property insurance policies. For instance, if you have a security system or smoke detectors installed in your property, you may be eligible for a discount.
Some insurance providers also offer discounts for bundling multiple insurance policies, such as home and auto insurance. It’s worth asking your insurance provider if there are any discounts you may be eligible for.
5. Assess the Insurance Provider
When choosing a property insurance policy, it’s important to assess the insurance provider. This means looking at the provider’s reputation, financial stability, and customer service. You want to
choose an insurance provider that has a strong reputation for paying claims promptly and treating their customers fairly.
6. Consider the Claims Process
Finally, it’s important to consider the claims process when choosing a property insurance policy. You want to choose an insurance provider that has a straightforward and efficient claims process. This means understanding what you need to do to file a claim, how long it takes to process a claim, and what documentation you’ll need to provide.
With the rising cost of building materials in Nigeria, you don’t want to be caught unawares by losing your hard-earned investment to natural or malicious damage. Rather than spending scarce funds to rebuild a destroyed investment , it’s best to save a small amount to insure your asset.