Many people tend to underestimate the importance of insurance until they experience a loss. Therefore, the decision to purchase an insurance policy depends on each person's risk tolerance. Our duty as real estate agents is to explain to our clients the importance of obtaining a policy to protect their investment.
There are different types of policies; however, when it comes to real estate, the most important coverages are aimed at protecting:
• The internal and/or external structure of the property.
• Personal belongings within the property.
• Damages to third parties (accidents within the property).
• Damages to other properties (in the case of condominiums).
There are various types of insurance, and not all homeowners need or seek the same type of coverage. Therefore, it is advisable to specify the policy coverage, its restrictions, and exclusions to address your potential risks. The most important elements to consider when deciding on the type of coverage you need are:
• Property use: Investment, rental, vacation, or primary residence.
• Liability to insure: Protection against legal actions and medical expenses.
• Protection against damages to other properties: Personal belongings and the interior of the property (floor, walls, ceilings, electrical installations, equipment, or air conditioning).
• Location: If it's in a hurricane-prone area (usually an optional policy).
• If it's in a flood zone (required by government and lenders).
• Type of property:
• House and townhouse: structural protection, flood, disaster, and hurricanes.
•Condominiums: Buildings often have a general policy (master policy) that covers the structure and common areas against flood and disaster.
•Number of properties: If you own multiple properties, you have the option to use "umbrella" insurance policies that allow you to spread the cost of the policy.
• Increase your deductible. As a homeowner, you can save money by raising the deductible on your insurance policy, which is the amount you must pay when a loss occurs and from which the insurance coverage obligation begins to cover the remaining balance. This is one of the most common ways to keep insurance costs low and is undoubtedly a great way to save, provided you have the deductible amount available at the time of a loss.
• Install an effective alarm system. Insurance companies offer discounts for having an alarm system.
• Try to pay for minor losses out of pocket, as frequent claims are factors that lead insurance companies to set a higher value for the premium. Don't forget to seek the advice of an insurance broker when purchasing your property, and if you've already acquired it, it's never too late to evaluate the conditions, terms, and coverage of your policy.
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