This form of policy is also known as a standard type of coverage. It will include "named perils" but is the least amount of coverage sold under property (examples: home, tenant, condo) policies. This is basically a fire and lightning policy. It is usually not a choice but rather a situation creates the need for purchasing this type of coverage.

Examples of when this type of coverage is offered, include the dwelling exceeds a certain age, wiring is 60 amp rather than usual 100 or more amps, plumbing is galvanized rather then copper or ABS, or the location of the premises is in an unprotected location. The lower form of coverage is all that is available due to the higher risk produced by these hazards.

The premium is often lower due to the limited coverage. This should be discussed with your agent or insurance broker. If you wish to reduce your costs then there are alternatives other then reducing coverage available to you, such as increasing your deductible.

Insurance policies can have penalties that can be assessed at the time of a claim. Be aware of reduced payouts and coverage reduction if you are deliberately choosing to under-insure.

Turners Tips recommends you take control of your insurance. No one wants an unpleasant surprise when a claim occurs.