Common Problems in Selecting Property Insurance Coverage

Ed Sneneh, Illinois Homeowners Insurance & Property Insurance  Expert in Chicago
300 N LaSalle St., Ste 4925, Chicago Illinois 69654

The vast majority of people mistakenly assume that insuring a house they rent to others is similar to insuring their own home where they live. Irreverent insurance coverage is not just wrong, it can be disastrous. If the appropriate property insurance policies are not acquired, people could be allowing themselves to take a chance for their property to be without any coverage, thus suffering tremendous losses in the event of fire, for example.

To insure a property you own and you live in, you will have to get a policy that is called a 'homeowners insurance policy.' Acquiring insurance on a house (or a property) you own but you do not use as a primary residence, you must have a policy identified as 'dwelling fire insurance policy.' Policy coverages, underwriting guidelines,  and rates are not similar. The key important coverage that is common is the 'Dwelling Coverage.' Both policies will cover the 'dwelling', or the real structure of the house.

What Is The Right Insurance for Your Property- Homeowners or Dwelling Fire Policy?

Homeowners insurance is generally less costly and includes extra coverages than dwelling fire insurance, if we assume other important things such as the credit worthiness of the property insurance applicants, geographical proximity of the property, physical condition of the home in question are all the same. Individuals might be eligible for homeowners insurance contract as opposed to dwelling fire contract in particular situations which includes:

  • Policy applicants are residing at the home to be insured. For example Dani may purchase a home for his family but considering his unacceptable credit score, he decides to put the house under his brother's name Sam. In this case Dan will not be able to get a homeowners insurance policy, because he is not the official owner of the house. Instead, Dan has to have his brother purchase a dwelling fire policy to protect the main structure of the property, and Dan must purchase a renter's policy, to cover his personal liability & the content of the house.
  • The home is not vacant for over 60 consecutive days. Cindy & her husband Tom decided to get rid off their house because of divorce. The husband moves out of the residence to be with his friend, and Cindy needs to move to live with her father. The house is presently on the real estate market, and the residence has been vacant for well over 60 days. Under these circumstances a new dwelling fire policy is required and the current homeowner insurance policy is not good any more.
  • The property is not used primarily for commercial purposes. Any commercial use with private homeowners insurance must be incidental. Daphne has just bought a two story building. She likes to live in the apartment on the upper level and use the lower level as her flower shop project. As a result of of clear commercial activities are performed on primary basis, then a business insurance contract will be needed (neither homeowners nor dwelling fire policy is relevant.)
  • The property is 4 residential units or less, owner occupied building. Mat Lopez bought a 4 unit residential dwelling. In the beginning he lived  on the premises; and for that, was allowed to buy a regular homeowners insurance policy. A couple of months later, he made a choice to move in a single family home, therefore disqualifying him from having homeowners insurance policy of the original dwelling. A dwelling fire insurance policy will be needed now.

Experienced insurance brokers should be able to assist you. Even with that, keep in mind that a full disclosure of the information concerning ownership, occupancy, & purpose of property is all very important for the purpose of getting the correct consultation.
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