Ten Home Insurance Myths

There are many myths that surround homeowners insurance. Here are the 10 most common:

1. If my home is flooded my homeowners policy will cover it.
Homeowners who are concerned about flood damage should consider purchasing a separate flood insurance policy. Not all homeowners policies come with built in flood insurance. Check your policy to see if it is covered.

2. If someone in my family is hurt on my property, insurance will pay.
Standard homeowners policies do not include residents or family members. Liability insurance is included to protect you from being sued if someone outside your family is hurt on your property.  If you feel you need additional insurance for family members, contact your insurance agent to find out what type of policy is required.

3. If my home is burglarized the contents will be replaced.
Without an inventory of contents including photographs and details of the purchase, your contents may not be reimbursed.  If you have high-value items in your home, you should file a report of contents and carry a separate rider for valuables. Your insurance agent can help you determine if this is necessary.

4. If I file a claim, my premiums will increase.
Insurance companies will review your claims history, but this is only one factor in determining insurance rates. If you are filing claims for items that are only slightly more than your deductible, it may increase your rates.  Consider not filing a claim for items that are close to your deductible amount.

5. I will be reimbursed the full value of  items that are stolen if my house is broken into.
Many insurance companies enforce maximum claim amounts in the event that jewelry, fine art or other valuables that may be stolen during a robbery. Carefully review your policy to see what the depreciation and maximum claim amounts are on your policy.

6. If my house is damaged, even if I did not maintain it properly, my insurance company will pay for the damages.
It is your responsibility to ensure that your home is not damaged due to a lack of maintenance. Most insurance companies will not cover claims that can be proven to be caused by a lack of proper home maintenance.

7. Unless I live in an area where it is designated a flood area I cannot get flood insurance.
If you own a home in a flood zone, your mortgage company will require you to have flood insurance. You can purchase flood insurance regardless of where you live.

8. Premiums are high and I will have to reduce my coverage to save money.
You do not need to skimp on coverage to save money on homeowners insurance. Most insurance companies offer “package discounts” that allow you to insure your automobiles, vacation homes or life insurance. Having alarm systems installed in your home can also lower your premiums. Check with your homeowners insurance agent to find out what other discounts are available to you.

9. I can insure my home for what its worth regardless of what it would cost to replace it.
Insurance coverage on your home should be based on “replacement value” (e.g., what it would cost to replace your home in the event of a total loss.) Your insurance agent or an appraiser can help you determine the amount of homeowners insurance coverage you should have.

10. I do not have a mortgage so I do not need insurance.
If you purchase a home for cash, you may not be required to have insurance. When a lender does not require you to have insurance (or you have no lender), it still makes sense to have a homeowners insurance policy.  It is not sensible to risk the loss of your home by not having insurance.

In spite of all of the myths surrounding homeowners insurance, you should always check with your insurance agent before making a decision on what coverage is best for you.