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The Importance of Property Insurance

By February 5, 2021Personal Insurance

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Every one of us has a to-do list and a filing cabinet inside our minds. The to-do list holds all the routine tasks and responsibilities of our daily lives, as well as, our goals and aspirations. The filing cabinet is where we store away those items on our to-do list that we have completed. And our natural tendency is that once we have labeled an item on the to-do list as “finished” and filed it away in our cabinet, we do never want to have to do it again.

Whether it is something we bought, built, or learned, the moment we complete a task and tick it off our list, it becomes a part of who we are or what we own. This is why when something we have built or bought is destroyed, we experience a deep sense of loss as if a part of our psyche is hurt. We hate to lose things because losing anything drags us back to the past and forces us to rebuild a part of our lives we viewed as “finished.”

If you have ever lost anything, you can relate to this. And it is why when we lose something, we spend time and effort far in excess of the value of that item, looking for it. The simple reason we do it is because it is hard to face loss, no matter how insignificant the item is. A certain part of us will always be looking around in hopes of finding what was lost. And we will do as much as is reasonably possible to avoid having to buy, build or do that thing a second time.

But what do you do when, in spite of your best efforts, you lose something monumentally valuable and have no way of replacing it? How do you deal with the loss of something that has taken you years to acquire, especially it was taken away by an event over which you had no control? The fact is everyone will be forced to answer this question because in life we will all invariably have to deal with accidents, loss, and disaster at some point.

The question is: when these events happen, what will you do about them?

The purpose of property insurance

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The idea behind property insurance is that life is unpredictable and the unpredictability of life will sometimes lead to loss and pain. Even if people recognize the unpredictable nature of life, it does not minimize the pain we feel when we have to deal with loss. As explains, property insurance minimizes the impact of loss by giving us a chance to make our way back from a loss. It ensures recovery after a loss.

How does property insurance work?

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Property insurance works by transferring the risk that a property will be lost, stolen or damaged, from the owner of the property to an insurance company. The insurance company agrees to bear the cost of replacing the item, if it is lost, stolen, or damaged, with the condition that the property owner pays a certain monthly fee to the company, among other conditions. This arrangement can be extended to cover a wide range of personal property, namely:

  • The house, which is usually people’s most valuable possession. This includes all of the systems and structures of the house such as the roof, walls, plumbing, etc.
  • The homeowner’s personal belongings inside the house such as furniture, electronics, appliances, and others.
  • All outlying structures within the property, such as sheds and their contents.
  • Valuable artwork, expensive jewelry, and heirlooms that hold sentimental value.
  • Accidents to third parties within the property.

Property insurance offers this coverage under a range of circumstances and includes damage from a variety of causes. Some of the damaging events (known as perils) that property insurance offer protection from include fire, smoke, lightning, explosion, wind, hail, theft, civil commotion, falling objects, and more. Furthermore, this protection can even cover an insured person’s personal items when they travel abroad or are outside their home.

Why you should have property insurance

  1. It is a hedge against loss

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Property insurance ensures that you are never left at the mercy of life’s unpredictable circumstances. It gives you a measure of control because you know you will never come to a place where you lose everything.

  1. Creates peace of mind

This knowledge helps to banish anxiety and lets you live with relative peace of mind. You can go through life with uncommon confidence and pursue your goals knowing that whatever you achieve will be protected.

  1. It is affordable

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In exchange for paying a negligible amount of money every month, you get the benefit of protecting assets worth tens of thousands of dollars. Sometimes the monthly premium is less than 1% of the value of the item that is insured.

  1. It lets you build a portfolio of assets

Insurance provides a cushion to break your fall if you ever suffer a financial setback. With proper insurance, you can undertake any kind of investment and minimize the risk of losing your money. It gives you a platform for building wealth.

There you have it, the importance of property insurance.