Most Common Home Insurance Myths

Home insurance is a substantial portion of the investment you make in owning or renting your home and shopping for insurance can help you reduce the costs of this type of insurance.

You need to be sure that you understand the policy you are purchasing thoroughly. Ask questions of your agent when you are confused.

Be sure to always compare rates using a FREE comparison tool, such as the one at the top of this page!

Shopping for Insurance Quotes

The process of shopping is, briefly:

1. Determine the amount of insurance you need to carry to meet the obligations to your lender and provide adequate coverage for your property.
2. Choose whether you wish to purchase replacement cost coverage or actual cash value coverage. Replacement cost is desirable because in most cases you can be assured that your insurance will pay for replacement of your property.
3. Deductible – a larger deductible can give you credit on premium amounts, but you should be aware that the deductible is subtracted from the amount of a claim should it occur.
4. Perils – these are the things that may happen to your property whether it is building, contents, or additional structures – examples of perils would be: fire, explosion, vehicle damage, windstorm, hail, theft, and vandalism among others.
5. Amount of liability coverage – depending upon your family’s need for liability protection.

Obtain several quotes from different insurance companies to compare prices. You should determine the financial status and complaint ratios for the companies from which you get quotes. These are available from your state Department of Insurance.

The link to it may be found by going to the National Association of Insurance Commissioners (NAIC) website and clicking on your state’s name. Your state’s website is a great resource for consumer information as well as company information.

Other sites for examining the financial strength of insurance companies are:

• NAIC website for financial and claims ratios
• A.M. Best Company – Insurance ratings
• Standard and Poor’s – Insurance financial ratings

Finally, you need to carefully examine the quotations you receive, compare premiums, and then compare the companies from which you get the quotes.

Read your policy thoroughly once you receive it to determine your duties as well as those of the insurance company.

Reading policies carefully can avoid these common misconceptions about home insurance coverage.

You need to be aware of some of the factors that affect your home insurance policy because often you can be surprised by the absence of coverage when you expected the presence of coverage.

Myths, Misconceptions, and Mistakes about Home Insurance

• Water Damage-Some people believe that any type of water damage is covered under the home insurance policy. If a pipe bursts or rain comes in the roof, your insurance will cover it. However, the home insurance policy will not cover such things as: flood; which is surface water, waves, tidal water, or overflow from these; water that backs up through sewers and drains; below-ground water seeping through foundations is not covered.
• Falling trees- It is often assumed that, if a neighbor’s tree falls on your house and causes damage, the neighbor’s insurance will pay for the damage to your house. This is not necessarily true because in the circumstance that your neighbor’s tree is perfectly healthy, your insurance must respond to repair your home.
• Dogs – some companies will not cover certain breeds of dog that are considered to be dangerous. Your agency will make you aware of this fact, but it’s worth checking.
• Cancellations and Premium Increases- Most home insurance policies cannot be cancelled as a result of one loss, so we assume that premiums cannot be increased after a loss. This is not so – depending upon the extent and circumstances of the loss.
• Jewelry, Coin Collections, and Gun Collections are usually limited to certain limits according to the home insurance policy. If you have jewelry worth over $1,500, coins valued at over $200, and a gun collection, these may not be covered. Be sure to know the valuation of your collections and take into consideration the deductibles you possess. You may have to acquire appraisals on jewelry, coins, and guns to be certain of their value.
• Mopeds or Motorized Scooters – Anything that is propelled by an engine is not included for liability under the home policy. This applies also to boats and recreational vehicles.
• Homes That Are Vacant in the Process of Sale – If your home is for sale and you have moved out, there is limited to no coverage under the home insurance policy. You can purchase this insurance, but you need to initiate the process.
• Vehicles Stored in the Garage – Even collector automobiles are not covered under the home insurance policy. Therefore, if your garage burns, you do not have insurance on your 1925 REO. Special policies can be written for this.
• Contractors Injured While Working on Your Own Premises – If anyone is going to work on your home, you should require them to provide a Certificate of Insurance indicating that they have purchased Workers Compensation Insurance. This is true of roofers, floor installation workers, or cleaning services.
• Business Equipment and Liability – The property you use to conduct a business from your home such as desks, computers, and printers is not covered under the home insurance policy. Nor does the home insurance extend to the liability that may arise from the operation of a home business such as a daycare or other home business.

Bottom Line

Make certain that your insurance agent is aware of your business issues and activities to assure yourself of coverage.

You can purchase flood insurance coverage from FloodSmart.gov, a government website that discusses the paths to purchasing flood insurance.

Earthquake insurance can be purchased routinely from your insurance agency and you should consider purchasing it if you are in an earthquake prone area.

Be cautious and don’t assume that you have coverage under the home insurance policy without verification from the policy statements or your agent.

If the information comes from your agent, be certain that he or she gives you a note for your file to verify coverage.

Use the FREE quote tool below to start your search instantly!