Insurance or maintenance?
Knowing just how far the cover goes is one of the most important things to consider with insurance. Knowing what can and can’t be covered means you can better prepare and plan for the unforeseen.
In general, insurance is there to protect you from the unforeseeable events beyond your control. While you can carefully select your site, carefully plan and build your property, and carefully select tenants, there are other things like storms, disasters, or simply the unexpected that can go wrong.
What follows is a breakdown of need-to-knows when considering insurance and risk in general.
What Insurance Is:
Most insurance policies follow the same form – cover is provided for “sudden and accidental” events causing loss, or something very close.
Sudden in this context means something not gradual. A tree falling on the shed is a sudden impact, while sunlight fading a carpet is a slow gradual process.
Accidental means an unintended result. In using a sledgehammer to break down a wall during renovations, you intended to cause damage to the wall. The neighbor’s car coming through the wall on a Tuesday afternoon? Less expected, and certainly not intended.
A pattern begins to emerge on what is and is not insurable. Insurance is protection against those sudden, unforeseen events which pose a risk to your investment.
What insurance isn’t:
Insurance is not designed to be a maintenance plan. Neither is it designed to remove the responsibility of looking after your property.
All properties suffer some kind of damage over time. Furniture fades, paint gets worn down, and carpets turn lackluster after so many years. These all have to be fixed and maintained, but it is a predictable, gradual process that causes the damage.
Not taking care of the property also means that there will be more damage. For example, not fixing a broken roof means that it is expected and predictable that rain will cause water damage.
What now?
When you understand what insurance does and does not cover, you can better manage your investment.
This is just the summary of how insurance is intended to work, and for more details you can see our cover page and policy wording.