The Home Insurance Myths You Need To Ignore

How much are you willing to shell out to protect your home? According to a Canstar research, the average daily cost of home and contents insurance is $4 a day—about the same price as your daily coffee. While some consider home insurance as an expense they can do without, most see it as a worthwhile investment. 

Surprisingly, while home insurance is undoubtedly important, many homeowners do not completely understand the risks covered by home insurance. It does not help that  there are also several home insurance myths that are that floating around that can hurt homeowners financially.

Prevalent Home Insurance Myths You Should Disregard

Below are some of the most common home insurance myths you should totally ignore.

Myth #01: Your home insurance will cover all kinds of damage to your home.

Standard home insurance won't cover damage from floods caused by earthquakes and other natural disasters. If you want protection against flood, you need to purchase flood insurance. Fortunately, you can purchase flood insurance, regardless if your home is located in a flood zone or not.

 Additionally, homeowners insurance won't cover damage resulting from your failure to maintain your home properly. Regular wear and tear, mold damage, damage from pest infestation (bats, rats, mice, and termites), and other damages that can be attributed to poor home maintenance won't be covered by your policy.

Myth #02: Your home insurance will cover all types of damage to your personal property.

Most home insurance will cover personal property, including furs and jewelry. However, you need to ensure that the coverage limits in the policy for personal property can completely protect you against loss caused by theft or damage. Otherwise, you have an option to purchase additional coverage for those items.

In line with this, make sure you document your valuable properties ahead of time. It is recommended that you make multiple copies and keep a few copies in a safe. An inventory list would be a great way to track your prized possessions and their value. The list will also be used as proof of ownership in case you need to file a claim.

During your claim, you will be required to list all the property that was damaged or lost. Your inventory list will also serve as a crucial point of reference so you can maximize the insurance reimbursement and support your claims.

Myth #03: If your home is destroyed or damaged, your insurance will cover up to the market value or up to the amount you paid for your home.

When your home is destroyed or damaged by perils like hail, fire, wind, or lightning, your home insurance's dwelling coverage will apply. Dwelling coverage is the cost of repairing and rebuilding the home for such damage.

If you have standard home insurance, the dwelling coverage will be based on your home's replacement cost, regardless of how much you paid for it. Calculating the replacement cost is done by multiplying the home's square footage by the current local construction costs.

Myth #04: Your home insurance won't cover natural disasters or "acts of God." 

Typically, home insurance covers most policies and natural disasters. However, most policies won't list an exclusion for "acts of God." Natural disasters that are often covered include wildfires, tornadoes, windstorms, hurricanes, and ice storms. Earthquakes are considered an exception but you have the option to purchase earthquake coverage as an add-on.

It is possible to have other exclusions in your home insurance policy depending on your insurance company's offers and where you live. That said, it is recommended that you review your home insurance policy carefully, so you know what's covered and what's not. However, generally, there are no exclusions for natural disasters or "acts of God."

Conclusion

If you're not familiar with home insurance, it is recommended that you check with your insurance agent to ensure you are getting recent and accurate information. Your agent can also help suggest the best policy for your needs and quickly dispel any home insurance myths you'll encounter along the way.

About the Author:

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