Top 10 Home Insurance Myths

Here are 10 of the most commonly held myths related to home insurance:

MYTH #1: STANDARD HOME INSURANCE COVERS FLOOD DAMAGE.

Fact: Standard home insurance does NOT cover damage caused by a flood. If you feel that you need coverage for a flood you should purchase a separate flood insurance policy.

MYTH #2: THE MEDICAL PAYMENT PORTION OF MY HOMEOWNERS INSURANCE WILL COVER INJURIES TO ME AND MY FAMILY.

Fact: MedPay, a common feature of standard home insurance policies, is there to protect you in the event that someone other than you or your family (a neighbor, friend, etc) gets hurt on your property and they do not want to sue you. MedPay will typically cover up to $1,000 for each covered claim to someone outside of your family. If you or your family, however, gets hurt on your property they are not covered by your home insurance policy.

MYTH #3: IF MY HOME IS EVER LOST, MY INSURANCE COMPANY WILL REIMBURSE ME FOR WHATEVER I TELL THEM I OWNED AT THE TIME OF LOSS.

Fact: In the event of a covered loss your home insurance company will ask you to make a list of everything you own and include specific details such as purchase price, date of purchase, serial numbers, etc. (Imagine trying to do this from memory!) The best way to avoid this situation is to have a home inventory already put together. Make sure to include photos, receipts, serial numbers and anything else that will help you prove ownership. Don't risk not having everything replaced in the event of a disaster. Make sure to keep your inventory in a fire proof safe or at a friend's house so it is still around when you need it!

MYTH #4: IF I FILE A HOME INSURANCE CLAIM, MY HOME INSURANCE PREMIUM WILL DEFINITELY GO UP.

Fact: While many home insurance companies do look at your claims history, there are many other factors that determine how much you will pay for home insurance. Filing one claim over a period of a few years might not increase your home insurance premium. To be on the safe side, always think twice before filing a claim for minor damages to your home. Consider your deductible. If the total cost of repair is not too much more than your deductible you might want to consider paying for the repairs yourself. While this might cost you more upfront, it might save you from an increased premium. If, because of a stroke of bad luck, you have to file multiple claims over a period of a few years and your premium is steadily increasing, rest assured there are other ways to save on your home insurance. Ask your home insurance agent about home insurance discounts. Sometimes simply installing a smoke or burglar alarm system; or by insuring your auto policy with the same company as your home policy, you can save a great deal of cash.

MYTH # 5 ALL OF MY VALUABLES- LIKE JEWELRY -WILL BE COVERED IN THE EVENT OF A BURGLARY.

Fact: There are limits on the amount of coverage you can receive for valuables such as jewelry, furs, etc. For example, most companies put a cap of $1500 on total jewelry lost during a burglary of your home. If you find that your jewelry values over $1500 you should talk to a home insurance agent and schedule an endorsement on your policy giving you additional coverage.

MYTH # 6: MY HOME INSURANCE COVERS MOLD AND/OR OTHER ISSUES RELATED TO LACK OF MAINTENANCE.

Fact: Actually, a standard home insurance policy does not cover issues related to a lack of maintenance. For example if a plumbing leak that was left unfixed caused mold to grow in the interior walls of your home- mold removal and remediation would NOT be covered in your home insurance. Remember that your home insurance only protects you from damage caused by covered perils such as wind, hail, lightening, fire and theft. Keeping your home well maintained and safe for others is your responsibility and your home insurance company will decline coverage for maintenance related claims.

MYTH #7: FLOOD INSURANCE IS ONLY FOR PEOPLE WHO LIVE IN A FLOOD ZONE.

Fact: Lending institutions, such as the bank that holds your mortgage, will require you to obtain flood insurance if you live in a standard Flood Zone. However, keep in mind that all homes are at risk for flood and standard home insurance policies do NOT cover flood related damage to your home. Due to the recent flooding in the Midwest the importance of this type of coverage for homeowners outside of a standard flood zone has become even more apparent. If your home is flooded and you do not have flood insurance you will be on your own to replace your home and its contents. Flood insurance is a wise idea for every homeowner.

MYTH #8: I WILL HAVE TO SKIMP ON MY COVERAGE IN ORDER TO SAVE MONEY ON MY HOME INSURANCE.

Fact: Saving on your home insurance does not mean that you have to give up important parts of your coverage. It is very important to always be adequately insured in the event of a loss. However, there are lots of ways that you can save money on your home insurance that do not involve changing your coverage. Home Insurance discounts are available for homeowners who use burglar alarms, smoke alarms, deadbolts and other protective devices. Want more savings? Ask your agent about combining your home insurance and your auto insurance policies- you can usually save up to 15% this way.

MYTH #9: WHEN DETERMINING MY COVERAGE, I SHOULD USE THE PURCHASE PRICE FOR MY HOUSE AS MY DWELLING COVERAGE AMOUNT.

Fact: A common mistake when homeowners are getting quotes for their home insurance is that they use the purchase price of their home to determine their dwelling coverage. Yet, the purchase price of your home includes the land under your home- which does not need to be replaced in the event of a fire or other peril to your home. For this reason, your dwelling coverage should always reflect the replacement cost of your home- or how much it would cost to rebuild your home in the event of a total loss. To determine this amount, multiple the sq. footage of your home by local construction costs.

MYTH #10: YOU CAN NOT BUY A HOME WITHOUT PURCHASING HOMEOWNERS INSURANCE.

Fact: This is a tricky one. Because while you actually CAN buy a home without home insurance (a lender may not require it or you may, although rare, pay cash for the home) you should still always have home insurance on any property you own. Whether a lender requires it or not, the risk is always there. It would only take one fire or lightening storm to destroy your home and leave you uncovered.

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