Building insurance
Both homeowners and business owners should have proper building insurance. Building insurance protects the value of your building from property damage. Whether it is a single family home, apartment complex, warehouse building, office building, retail center or shopping center, it should be insured with the right amount of coverage.
Residential homes and business buildings are covered by building insurance policies which insure the building and contents. Coverage should include damage from losses due to fire, natural disasters, windstorm, flood, riot, civil unrest, theft and vandalism.
Building Insurance mitigates the risk of economic loss due to potential hazards. Insurance companies have a rating system which classifies buildings in accordance to their loss potential. This rating system determines the annual rate of the building insurance premium the owner pays.
In addition, building insurance should have liability coverage to protect the owner in the event that a claim is made that has caused personal damage or harm. The liability insurance covers damages and medical bills, up to the policy limits, to third parties as a result of bodily injury or property damage for which the building owner is legally liable.
Building insurance should include coverage for the building and structures, fixtures, machinery and equipment. In addition, personal property should be insured against direct loss or damage to protect the building owner’s physical assets when a disaster strikes. The coverage for business building owners include any stock the business has in inventory, furniture and fixtures, in addition to any personal property of others while in the insured's care, custody or control. The coverage for residential buildings include the building, other structures, furniture, fixtures, valuables, and cost to replace the home.
The most common losses to residential and commercial buildings occur from fire and weather phenomena. According to the United States Fire Administration, in 2005, an estimated 396,000 residential structure fires occurred that resulted in $6.9 billion in losses. Between 1998 and 2007, an average of 1,664,500 fires occurred which resulted in an estimated $10,949,900,000 in losses each year. In 2007 there were116,500 Fires to non-residential buildings which resulted in 105 deaths, 1,350 injuries and approximately, $3,092,000 in losses. With these staggering statistics, you can see the importance of having building insurance for both residential and commercial buildings.
Weather phenomena has made national news headlines over and over again. Hurricanes, tornados, earthquakes and floods have caused area wide devastation. This devastation in recent years has amounted to billions of dollars in losses. Some homes and buildings were completely destroyed. No one knows when a natural disaster is going to strike the area in which they live or do business.
Building insurance protects the investment you have made in your home or business when the building is damaged or destroyed by these disasters. In addition, building insurance can cover damage that causes a residential property uninhabitable or a commercial building non functioning, and provide the costs of alternative accommodation while repairs are made.
Proper coverage is an important consideration. Enough coverage should be purchased to assure the cost of rebuilding or repair is sufficient. Insuring the property for its full market value will cover the cost to rebuild in case of total destruction. Full market value is the cost to rebuild at today’s prices. A home or building may be older, and the insured value may be calculated at a lower price. But will this amount of coverage be sufficient to replace the building and the contents?
Most mortgage lenders and business loans where the property is used as collateral, require sufficient coverage to protect their investment. Enough building insurance coverage should be purchased to cover the repayment of the loan in case a home or building is destroyed or significantly damaged. Deductibles are also another consideration. Deductible are what the building owner will have to pay out of pocket before the insurance will start paying for damages.
Having building insurance is more than just having coverage required by lenders. It is the peace of mind in knowing you will be able to rebuild or replace your home or business. Building insurance protects the most valuable assets you own.