Almost every homeowner in the United States has homeowners insurance coverage for their home. Mortgage lenders actually require home insurance as a condition for the mortgage loan. However, a surprising number of homeowners do not fully understand what risks their insurance actually covers.
In too many cases the homeowner is unpleasantly surprised when they submit a claim for damage only to learn that the damage is not covered by their insurance. In many cases when the damage is covered, the deductible is higher than they expected.
5 Common Myths About Home Insurance
Here are some of the most common misunderstandings homeowners have about their homeowner’s insurance coverage:
MYTH #1
If your home is damaged or destroyed, your homeowners insurance covers you up to the amount you paid for your home or the market value.
ACTUALITY: When your home is damaged or destroyed by a peril such as wind, hail, lightning or fire, the dwelling coverage (sometimes called Coverage A) portion of your homeowners insurance policy applies. Dwelling coverage refers to the cost of rebuilding and repairing your home for such damage.
However, the dwelling coverage under standard homeowners insurance is based on the replacement cost of your home, regardless of how much you paid for the home. Replacement cost is usually calculated by multiplying the square footage of the home by current local construction costs.
MYTH #2
Your homeowners insurance covers any kind of damage to your home.
ACTUALITY: Standard homeowners insurance does not cover damage from floods caused by a natural disaster or earthquakes; for protection against flood damage, you must purchase flood insurance. Flood insurance is available whether your home is in a flood zone or not. Most insurance companies offer flood insurance policies through FEMA’s National Flood Insurance Program. Likewise, for protection against earthquake damage you would be required to purchase earthquake insurance.
Also, your homeowners insurance does not cover damage that results from your failure to properly maintain your home. Mold, damage from pest infestation (such as termites, bats, mice and rats), regular wear and tear and other damage attributed to home poor maintenance is not covered by your policy.
MYTH #3
Home insurance covers all of your personal property.
ACTUALITY: Most homeowners insurance covers your personal property, including valuable property such as jewelry and furs, but your policy will have a limit on the amount of coverage for your valuable personal property. Make sure the coverage limits in your policy for personal property are adequate to fully protect you against loss due to damage or theft. If not, additional coverage for those items will be available to purchase.
Also, make sure to document your valuable personal property ahead of time; make multiple copies, and keep one copy in a safe place. A safe deposit box at your bank or a safe in your home is a good place to store it. An inventory list is a good way to track your personal belongings as well as their value; this list may also serve as your proof of ownership in the event you have to file a claim. In your claim, you will be required to list all the personal property that was lost or damaged. The inventory list will be an important point of reference to support your claim and maximize your insurance reimbursement.
MYTH #4
Homeowners insurance is required by law.
ACTUALITY: Homeowners insurance is not required by law; however, almost all lenders require it as a condition to approving your mortgage loan. Lenders require homeowners insurance due to the risk of loss the lender would incur if your home were damaged or destroyed. Most homeowners cannot afford to repay the loan or rebuild or repair the home without the insurance.
MYTH #5
Homeowners insurance is not worth the expense.
ACTUALITY: Homeowners insurance is there for you whenever disaster strikes and it takes only one event to potentially destroy your home. Without homeowners insurance, you have no protection against catastrophic damage which could leave you homeless and unable to rebuild.
Not only will your homeowners insurance cover your cost of rebuilding, it will assist in the replacement of personal valuables that were damaged or destroyed. It will also pay the expenses for temporary lodging while your home is being rebuilt.Your homeowners insurance also provides protection against personal liability if a guest is injured on your property and sues you for damages. It covers the related medical bills, legal costs of your defense and damages you may owe as a result.
If you are looking for ways to lower the cost of your homeowners insurance premiums, do not make the mistake of reducing your coverage. Instead, speak to your insurance agent about increasing your deductibles and other ways you may be able to reduce some costs. It may also be worthwhile to comparatively shop for homeowners insurance every few years.; you may be able to find the same coverage for lower premiums.
Contact Home Insurance Specialists At Pro Insurance Group
Knowing that you have adequate homeowners insurance and understanding your policy’s coverage will provide peace of mind. Contact the homeowners insurance experts at Pro Insurance Group to determine if you have all the coverage you need at the lowest cost by calling (833) 619-0770 or by requesting a quote online today!