FAQ on Property Insurance Polices
For some, owning a property is a big step. However, a lot of questions can arise on insurance policies and how they affect the property. It is best to research and understand all policies and how they work before binding into an insurance contract with a company. Also, make sure you understand the company and that they are trustworthy.
Q. What is an insurance policy?
A. An insurance policy is a legally binding contract between an insurance company and the person who buys the policy, commonly called the "policyholder," who also is often the person insured.
Q. How does an insurance policy "protect" me?
A. Insurance policies offer protection against economic loss, that is, loss or damage which can be measured in purely financial terms and compensated by money.
Q. What does it mean to have an insurable interest in something?
A. A person has an insurable interest in something when loss or damage to it would cause that person to suffer a financial loss. In order to exercise an insurable interest, you must take out an insurance policy protecting the item.
Q. Are there any government agencies that regulate how insurance companies operate?
A. Insurance companies in the United States are regulated primarily by the individual states. There is no federal regulatory agency that oversees insurance companies. The name of the insurance regulatory agency typically is "Department of Insurance," "Division of Insurance," "Insurance Bureau" or something similar.
Q. Are there any limitations on what an insurance company can charge for insurance?
A. For each type of policy, insurance companies have a range of premium levels that may be charged based on various factors that are considered at the time an application is submitted. The rates and rating factors for most types of insurance must be filed with the insurance regulatory agency for each state where the insurance is to be sold. In some states and for some types of insurance, the rates must get regulatory approval before they can be used.