Insurance Info

Property Damage Insurance: What You Should Know

Property damage insurance has lots of subcategories and peculiarities depending upon the type of damage and the type of property mentioned in the insurance policy. When buying property damage insurance, homeowners and commercial property owners must decide:

What type of coverage?
How much coverage?

Unfortunately, there’s no simple solution for the type of property damage coverage one should invest in, as each property is unique. Below are some items for consideration when evaluating what type of coverage:

What type of natural disasters is your community prone to? What has the community experienced in the last decade?
- Flooding
- Mudslides
- Wild Fires
- Hurricanes
- Tornadoes
- Severe Thunderstorms (lightning, hail, flash flooding)
When considering water damage/flood coverage, what type of grade does your property sit on? Does water runoff neighboring properties into yours? Are you next to a hill or mountain? Are you close to a river or creek whose banks overflow?
Do the walls suffer from cracks? Are there leaky windows? Are the pipes worn and subject to leak or burst?
How extreme are the temperatures in the summer and winter? Very cold conditions can lead to expansion, cracking and bursting of pipes. Extreme heat can lead to buckling of streets and sidewalks- which in turn may break water, gas, and sewage pipes.
When considering fire coverage, how close are the adjacent properties? What type of fireproofing was used to build your property?
Be sure to review the limitations AND exclusions in the policy and “compare apples to apples” when shopping for an insurance plan. Each insurance carrier may offer slightly different hazard clauses or policies as far as what is and what isn’t covered.

For additional information, we recommend:

Glossary of Property Damage Insurance Key Terms

Property damage or Physical damage (PD): destruction, harm or loss of tangible property
Property damages: compensation fees paid to a person whose property was damaged
Catastrophe: A sudden, severe disaster that results in a large amount of damage and causes a high number of car and home insurance claim
Common Homeowner’s Coverage Classifications:
- Coverage A: Otherwise known as the Dwelling, the policy covers the house structure, including flooring, frame and fixed objects within the home; this coverage replaces the structure in the event of a total loss due to a covered peril.
- Coverage B: Covers other structures, such as garages, sheds and barns.
- Coverage C: Covers 50% of your personal items in Coverage A.
- Coverage D: Expenses that the policyholder will have if the property is left inunhabitable after a covered peril; expenses include living expenses and temporary housing.
Debris Removal Clause: Protection on the cost of removing debris caused by a peril; not typically covered under a standard policy.
Dwelling: Coverage for the house and structures accompanying the house, such as porch or garage; built-in appliances, cupboards and carpet can be included, but land is not protected.
Dwelling Forms: Protection for the residential building and personal items within the dwelling; each dwelling form offers a varying degree of protection.
Earthquake Endorsement: An additional clause to the common homeowner policy, this coverage can be added to protect against earthquake damage.
Fire Insurance: insures against direct loss by unintentional or hostile occurrences of flame and heat from fire, lightning, and other defined causes (sometimes a subcategory of hazard insurance)
Flood: Partial or complete submersion of normally dry land by either water or mud; this temporary situation is often caused by water runoff or overflow; unless specified in a normal insurance policy, this coverage is not included.
Flood Insurance: coverage against damage and loss due to floods or flood waters, often used in combination with a government-backed flood insurance plan (required by lenders for properties located in federally designated flood areas)
Hazard Insurance: insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards
Increased Hazard: The introduction of dangerous materials or activities to the property that will create an increased risk of harm to the property; the liability of these increased risks are not covered by the original policy terms.
National Flood Insurance Program (NFIP): A government program used to provide flood insurance for property; the NFIP has reimbursement options for flood insurance and will write coverage policies directly.
Other Structures: Detached structures like tool sheds, storage sheds or separate garages that share the property ground on the insured land; homeowner policy generally covers other structures for 10% under Coverage A.
Peril: Accident or disaster that causes destruction of structure or personal items; the cause of the accident or disaster as explained in policy.
Personal Property: Values or items other than the physical structure of the home; most policies cover personal property and structural property.
Personal Property Coverage: (sometimes referred to as “Coverage C” or “Contents Coverage”) included in a standard home insurance policy and protects your personal items and household contents in the event they are stolen or destroyed by fire, hurricane or other peril covered in your policy. These items may include, but are not limited to, furniture, clothing, and sports equipment. Contents coverage limits are usually 50%-70% of your dwelling coverage
Sinkhole Collapse: The sudden collapse or sinking of land into underground spaces eroded by water. This natural disaster is covered by some homeowner insurance policies.
Smoke Damage: Damage solely attributed by the smoke itself; excludes damage caused by fire, combustion, heat or burning.
Vandalism and Malicious Mischief: A term in your homeowner’s policy, this term covers your property against intentional destruction or damage caused by other individuals.