Property insurance provides protection against most risks to one’s property, such as fire, theft and some other damage. There are a few kinds of property insurance such as fire insurance, home insurance and boiler insurance.
Perils covered by property insurance include damage caused by fire, wind, hail, and more. Vandalism and theft are also protected. However, property insurance policies normally exclude damage that results from a variety of events, including tsunamis, floods, drain and sewer backups, seeping groundwater, standing water, and a number of other sources of water. Mold is usually not covered, nor is the damage from an earthquake. In addition, most policies will not cover extreme circumstances, such as nuclear events, acts of war or terrorism. There are three kinds of insurance coverage.
Replacement cost coverage
Replacement cost coverage pays the cost of repairing or replacing your property regardless of depreciation or appreciation. This kind of coverage is based on replacement cost values but not on actual cash value.
Actual cash value coverage
Actual cash value coverage provides for replacement cost minus depreciation.
Extended replacement cost
Extended replacement cost will pay over the coverage limit if the costs for construction have increased. However, this will not exceed 25% of the limit. When you buy an insurance policy, the limit is the maximum amount of benefit the insurance company will pay for a given situation or occurrence.