2.  Protecting your assets

Your house and your business premises are probably among the largest investments you have made in your life.  So why have you not protected them?

Basically, property insurance covers buildings and their contents against loss or damage as a result of fire, flood, theft, or a range of other perils.  Contrary to popular belief, property insurance need not just be for homeowners but also covers businesses and even tenants.  In fact, it is for anyone with property to protect.

However, property insurance is merely a generic term covering several types of insurance packages that are specifically tailored for the homeowner, the tenant or the businessman.

Most house owners may not realise it but they have a homeowner's policy on their house the moment they take out a mortgage from the bank.

In fact, if you are planning to buy a house, you would not be able to finance it unless the lending institution knows you have home insurance to cover the property in case of a big loss, like a fire.

So let's say something bad happens (touch wood).  A fire breaks out in your home.  Without insurance, where would you get the funds to repair your house or even buy another one if it is destroyed?  And what about your belongings, the things that you have scrimped and saved for over the years, only to have them go up in flames one hot night?  What about the big-ticket electrical items that make a home so much more comfortable?  How would you be able to replace them overnight?

Without property insurance, it would probably take a long time for you to replace everything - unless you have a sizeable nest egg stashed away in the vault.  And even then, replacing items overnight that you have bought over several years would definitely put a serious dent in your savings.

And with burglaries becoming more rampant, what happens if you come home one night only to discover that someone else has been there before you?  And that trespasser has carted away all your furniture and other personal items?  Unless you have property insurance, it would take quite a while to financially recover from an experience like that.

Depending on your policy, homeowners' insurance also provides liability coverage to protect you from being sued if someone gets injured on your property.  Contrary to popular belief, something like that does not just happen in the United States, it can also happen here.

For the businessman, a fire can literally wipe out not only your premises but also your inventory.  Businesses have been brought to the brink of ruin with just one major fire.  And with flash floods becoming a more common occurrence, you never know when one might hit your area and cause flood damage.

The businessman's ability to recover from any one of these disasters would be heavily dependent on his property insurance.  Essentially, property insurance would protect your business against physical damage to, or loss of, your assets.  Assets, broadly defined, include the area in which your business operates as well as the contents housed there.

So far, we have seen the benefits of property insurance for homeowners and businesses.  According to the understanding of most people, property insurance is generally for these two categories only.  However, experts will be able to tell you that even tenants are better off if they have some form of property insurance.

For instance, many young people moving into their first apartment - and even some veteran apartment dwellers and tenants - may think they do not need home insurance.  After all, they may not have much furniture and they may assume that their landlord's insurance would be sufficient to cover any major damage to the unit or house.

They could not be more wrong.

If you are a tenant, it is best to read your tenancy agreement just to be clear about who - whether you or your landlord - would be responsible for any potential property damage.  If the contract says you are responsible, it would be more prudent to get some sort of insurance coverage.

However, more often than not, the landlord would have purchased the necessary insurance to cover his property.  But even if you are just renting, would you be able to afford to replace all your possessions out of your own pocket?

While you might not think you own much of value, it all adds up.  Probably your CD collection alone, built up over a number of years, would cost more to replace than you could afford.  And those chairs that you carted back from Bali several years ago that are now probably worth 10 times what you paid for them could all go up in smoke.

While those items cannot be compensated for in terms of sentimental value, at least you would not be severely out of pocket if you could be financially compensated to a certain extent by the insurance company.

And as moving around costs a lot of money, what with things like rental and utilities deposits to think about, having tenant's insurance might not be such bad idea after all.

^ Article extracted from NST Property Times - Signed&Safe

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