Types of Property Insurance: What You Need to Know

Wouldn’t it be nice if we could all feel as confident and secure as Linus does when he’s carrying his security blanket? Property insurance can give you that same feeling—but with real protection. (Unfortunately, Linus’s blanket wouldn’t actually do much to protect him.)

Property insurance is an umbrella term. It covers several different types of insurance policies, and they all have individual guidelines. These insurance types include:

• Homeowners insurance
• Condo/Co-op insurance
• Landlord insurance
• Renters insurance
• Mobile home insurance
• Flood insurance
• Earthquake insurance

For each policy type, we’ll walk through what it is, why you might need it and what it covers. But first, let’s hit the basics.

What Is Property Insurance?

Like we mentioned above, property insurance is just a broad term that refers to several different types of insurance, including homeowners, condo, landlord, renters, mobile home, flood, and earthquake. In general, these policies all provide three types of protection:

• Liability
• Structural
• Personal property

A few types do stray from these three standard protections, but we’ll cover those in a minute.

Property insurances basically insure various types of properties from things called covered perils. What’s a covered peril? Glad you asked. A peril is a natural or unnatural hazard. Your policy will spell out the perils that are specifically covered for your property.

These covered perils typically include natural events like fire, smoke, wind, hail, snow, lightning, flooding and earthquakes. Covered perils can also include unnatural events like vandalism and theft.

Another important detail to note: If anyone (other than you) is injured on your property and you’re found to be responsible by a court of law, most property insurance policies provide liability coverage, so you don’t get stuck paying legal and/or medical costs on your own.

You might be thinking, That’ll never happen to me! But you never know what’s coming your way. Life has a sneaky way of throwing curveballs when you’re not looking.

Maybe your dinner guest accidentally trips on that stair you’ve been meaning to fix, breaks an ankle, and sues you. Well, they’re not going to get an invitation to dinner ever again. But if you have property insurance, the good news is that the legal and medical expenses are probably covered.

Is property insurance worth it? Absolutely! The premium you’ll pay is typically a very small percentage of the potential financial hit you’ll suffer from that curve ball.

Homeowners insurance is probably the best-known type of property insurance. And it’s a good thing since your home is probably one of your largest investments—and it needs protecting!

What is homeowners insurance?

Homeowners insurance is financial protection for your home against loss from disasters, theft and accidents. It also protects your belongings and provides liability coverage.

Why do you need homeowners insurance?

Your home is more than just a house. Not only could it be your largest investment, it’s also your special place for storing things like that antique clock your mom gave you. If the clock is destroyed by a fire, homeowners insurance won’t ease the loss of the clock’s sentimental value, but the right policy will help you buy a new one.

What does homeowners insurance cover?

Standard homeowners insurance policies cover losses and damages to your residence’s structure along with furnishings and other assets. It also provides liability coverage for accidents that happen inside your home or on your property.

Here’s how it works. When you file a claim for a covered event, you’ll be required to pay your deductible and the insurance company will pay the rest.

Protect your home and your budget with the right coverage!

For example, let’s say the wood flooring in your home is ruined from a broken water pipe. If the cost to replace the flooring is $10,000, you might file a claim against your homeowners insurance policy. If the claim is approved and your deductible is $3,000, the insurance company will cover the remaining $7,000. Phew!

Keep in mind though that homeowners insurance can get tricky about what it does and doesn’t cover. It’s a great way to protect your property, but it won’t pay for everything. Take a close look at potential gaps by consulting a local, trusted provider.

Whether you call your condo home, or it’s your home away from home, it’s an investment that needs insurance protection. But condos and houses do have distinct differences, so they require different types of insurance coverage. Let’s go over the basics.

What is condo insurance?

Condo insurance is purchased by the condo owner to provide financial protection for loss and repair to the condominium unit they own.

Why do you need condo insurance?

A lot of condo owners don’t realize that their condo and personal property are not covered by their condo association (aka HOAs). HOA insurance typically focuses on the building structure and common areas. But condo owners are responsible for the coverage on the specific unit they own.

All smart condo owners need to purchase condo insurance. The right policy will provide financial reimbursement (after you pay your deductible of course) so you can continue building your nest egg.

What does condo insurance cover?

Here’s the gist of what condo insurance coverage typically includes:

• Personal liability: If someone is injured inside your condo, liability coverage will help you pay for related legal and medical expenses.
• Structural protection: If damage is caused to the walls (interior or exterior) of your condo unit by a covered peril, property protection coverage will help you pay for repairs.
• Personal property: If your belongings (electronics, appliances, furniture and clothing) are stolen or damaged, condo insurance will help pay to repair or replace them.

If you own property and rent it to tenants, you need landlord insurance. It doesn’t matter if your tenants are friends, relatives or your former spouse, you still need landlord insurance.

What is landlord insurance?

Landlord insurance protects you legally and financially from damages or injuries related to a rental property you own.

Why do you need landlord insurance?

Whether your rental property is damaged in a hurricane or your tenant in apartment 4B had an accidental kitchen fire and claims they’re not at fault, landlord insurance is crucial for protecting your assets from events that are completely out of your control.

What does landlord insurance cover?

Landlord insurance policies include at least three core protections: property damage, liability and lost rental income.

Remember when we said we’d call out the insurance types that stray from typical coverage (structural, personal belongings, liability)? Well, this is one of them.

For one thing, reimbursement for lost rental income isn’t covered by other types of policies. Another thing to remember is that landlord insurance does not cover a tenant’s personal belongings. It’s up to the tenant to buy renters insurance if they want to be reimbursed for damage to their stuff.

But hold on, before we get into renters insurance, there’s more you should know about landlord insurance. Depending on the location and condition of the rental property you own, you might consider additional coverage that can cover things like construction costs, commercial property, flood insurance, earthquake insurance, water backups and vandalism.

For example, if your rental property is in a high-crime neighborhood, you might consider adding vandalism protection to your policy.

Most renters think that if anything happens to their belongings or guests inside their rental property that they’ll be covered financially by their landlord. Nope, not true. It’s up to the renter to buy insurance.

What is renters insurance?

Renters insurance provides coverage for a renter’s (or subletter’s) belongings and liabilities. Anyone renting (or subletting) a single-family home, apartment, duplex, condo, studio, loft or townhouse can purchase a renters insurance policy.

Why do you need renters insurance?

Picture this. After saving for months, you finally bought a new 65-inch 4K Roku-smart television. You’ve been enjoying it for weeks when you notice a water spot on the ceiling where water has been dripping onto the top of your new TV all day while you’ve been at work. You hold your breath, turn on the TV and . . . nothing. Time to panic?

Not if you bought renters insurance.

What does renters insurance cover?

Renters insurance covers damage to renters’ personal belongings from fire, smoke and water damage that occurs inside the rented property. It also provides liability coverage if someone is injured in the property you rent. So that fancy TV you bought that now displays multiple channels of warped static is covered. You’re also covered if your friend slips on that puddle that’s been collecting from the water droplets that bounced off your TV. Whew!

Before we talk about the basics of mobile home insurance, let’s get clear about the difference between standard single-family homes and manufactured homes. It’s pretty simple: Standard homes are built on-site while a manufactured home is delivered as a complete structure.

What is mobile home insurance?

Mobile home insurance is insurance for manufactured homes. It covers any dwelling that falls under the manufactured home definition.

Why do you need mobile home insurance?

Even though manufactured homes are generally much cheaper to buy than average single-family homes, it’s still super important to have insurance. That’s because mobile home insurance protects your investment and keeps you from having to pay for repairs or a replacement out of your own pocket.

What does mobile home insurance cover?

Much like standard homeowners insurance, mobile home insurance covers liability claims, the home itself and your personal belongings.

Most of the same coverage options that are included in homeowners insurance are also included in mobile insurance. The main difference between the two policy types is how insurance companies determine your home’s value.

With a mobile home policy, the insurance company uses the actual cash value to assess your home’s worth (how much your home is worth at the time of damage). For a homeowners policy, insurance companies determine your home’s worth by considering today’s replacement costs (reconstruction using the same materials, at the same quality, in the same place).

Flood insurance can help ease the trauma caused by flood damage. Let's go over some fundamentals.

What is flood insurance?

Flood insurance is an extra layer of protection that covers dwellings for losses caused by flooding from heavy or prolonged rain, melting snow, a coastal storm surge, blocked storm drainage systems or levee dam failure.

Flood insurance policies are different from the basic hazard insurance coverage that’s usually included in homeowners insurance (for example, water damage from a burst pipe or a toilet that overflows). Flood insurance, on the other hand, provides coverage for water damage caused by the rising of a body of water that covers normally dry land. Flood insurance is not a normal part of your homeowners insurance and must be purchased separately.

Why do you need flood insurance?

There are many reasons why you might need flood insurance to protect your investment.

In general, any dwelling that’s prone to flooding from the shape of the surrounding land (think Katrina), the type of soil or weather patterns, needs to be protected by flood insurance. If you own property in a neighborhood that’s a federally recognized flood area, you’re required by law to purchase flood insurance.

But floods can be super unpredictable. That’s why, even if you’re not required to purchase it, it’s still a good idea to at least look into flood insurance so you know you’re covered no matter what.

What does flood insurance cover?

Flood insurance is another type of property insurance that’s different from most others. It only helps cover physical damage to your home and belongings from floods or related losses from rising water. The amount of coverage and reimbursement you get all depends on what’s specifically spelled out in your policy.

It’s so important to remember that flood insurance is not included in your homeowners insurance coverage. If that’s news to you, you’re not alone—most people need help understanding flood insurance.

If you live in a coastal area where hurricanes are common, it’s a good idea to combine flood insurance with wind insurance. Wind damage is typically included in homeowners policies, but that might not be the case if you live in a hurricane-prone zone and your property is damaged in a hurricane. We recommend you talk to an insurance agent to make sure you have the right coverage.

You don’t have to be a California property owner to consider earthquake insurance these days. Twenty-three percent of homeowners nationwide who had homeowners insurance in 2020 said they also had earthquake insurance.¹

What is earthquake insurance?

Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. Earthquake damage is usually not covered by standard homeowners insurance policies.

Why do you need earthquake insurance?

Earthquake activity is getting more frequent. According to the U.S. government’s National Oceanic and Atmospheric Administration, the overall trend of yearly high-intensity earthquake activity is increasing significantly.²

Earthquake insurance isn’t required by law, and most mortgage lenders don’t require it either. But if you live in an area that’s historically susceptible to seismic activity, and you want to protect your nest egg (who doesn’t?), earthquake coverage is a smart purchase.

What does earthquake insurance cover?

Earthquake insurance covers three things: damage to your home, damage to your personal belongings, and additional living expenses if you need to temporarily live somewhere else after an earthquake.

But reimbursement for temporary living expenses is different from standard property insurance coverage, right? Yes! Earthquake insurance is the last one (we promise!) that strays from the standard three types of coverage (structural, personal belongings and liability).

The dollar amount of earthquake coverage you purchase is entirely dependent on your situation, so get advice from an insurance agent to get the right coverage.

Make Sure Your Property Is Protected

Property insurance coverage has lots of twists and turns and can be hard to understand. You don’t have to try and figure it out alone.

If you’re ready for a real feeling of security (not imagined—sorry Linus) but not sure how to get there, reach out to one of our Endorsed Local Providers (ELPs) who can find the best property insurance for your situation.

Connect with an ELP today to learn more about your options.