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Home Insurance Myths You Need To Ignore

Written by Posted On Wednesday, 16 October 2019 15:07

Unlike auto or health insurance, the law does not require homeowners to purchase home insurance. You'll need one, though, if you're buying a home on a mortgage. Nevertheless, you should seriously consider getting a homeowners insurance policy to protect your family from financial burdens, should disaster strike.

But just like other types of policies, there are also plenty of misconceptions about homeowners insurance that you need to need to be aware of. Many people think of insurance in black and white – either you're protected, or you're not. The thing is, there are actually more gray areas to it than you’d ever realize.

Separating the facts from the fibs will help you better understand the nature and scope of your policy. Here are some common myths about home insurance that you should ignore.

Your coverage limit should be the same as the value of your home.

Many homeowners believe it's smart to insure their homes for the amount of its current market value. What you should know is that your home's purchase price can either be less or more than the amount it takes to rebuild your home in case of total damage.

To make sure that you’re fully covered in the event of a loss, carry insurance that’s a little more than the estimated cost of rebuilding your home. You might also want to check if you have enough Ordinance or Law Coverage, in case the expenses increase due to the building codes in your area.

Insurance for older homes is less expensive.

Just because a house has more years on it does not mean that has cheaper insurance premiums. In fact, older homes tend to use a more complicated building technique, which means they’re likely more expensive to replace than most modern homes.

Most old homes have more intricate and detailed styling compared to today's contemporary houses. There are even companies that refuse to cover older homes when they’re deemed too costly to repair.

When determining the cost of your premiums, the insurer takes into account the features of your home and the materials used to build it. They will also factor in the replacement and repair costs, as well as other additional coverages you want to avail of.

To get a competitive premium rate, ask quotes from several home insurance providers, and compare the value of their offers.

Standard home insurance policies include flood coverage.

While your policy covers several incidents of water damage, a flood is not one of them. If you want secure coverage for this specific peril, your best option would be a flood insurance from private firms or a specialty flood policy from the NFIP (National Flood Insurance Program).

Most lenders require flood insurance from borrowers living in flood-prone areas. But even if it's not mandatory, flood insurance is essential and it's ideal for every homeowner to have one.

Home-based businesses are also covered.

Those who run a home-based business usually assume that their homeowners insurance would also cover for their company's supplies and equipment in the event of a loss. This is not the case.

Home insurance policies generally exclude business-related coverage. If you’re running a business from home, secure a business insurance policy or BOP for your venture to ensure that it has the protection it needs.

Homeowners insurance covers all of your possessions.

While a homeowner's policy typically includes coverage for personal property, it has its limitations and will likely NOT cover every one of your belongings. Insurers put a cap on the coverage amount, especially for jewelry and other valuable collections.

If you have plenty of rare and precious items that you want to cover, you may purchase additional insurance in the form of an “add-on” or an endorsement.

Any injury that takes place within your home is covered.

The liability coverage of your home insurance policy only covers accidents and injuries in your home when they happen to other people. If you're hosting a party and a guest gets hurt, your home insurance will pay for the liability costs. However, if you or one of your family members gets injured, you'll have to use your health insurance or pay for the medical expenses out-of-pocket.

The Bottom Line

For you to really know what’s in your home insurance policy, take the time to read and understand it. Keep tabs of exclusions to your coverage, so you can decide how to cover those risks later. Most importantly, ASK. If some things are unclear, contact your agent and ask.

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Rachael Harper

Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a home insurance and wealth management firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.

https://www.bennettandporter.com/

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