Around 85 percent of American households have homeowners insurance, primarily because most mortgage companies require it. However, not every household understands their insurance policy from top to bottom. Some don’t even know what it’s for!
There are many misconceptions when it comes to homeowners insurance, such as what it covers, what it doesn’t cover, and who needs it. The reality is, home insurance policies aren’t as extensive as they seem, which means that they don’t cover everything. Hence, as a homeowner, it’s important that you learn what your insurance actually covers. Otherwise, you may end up filing a claim for damage that’s not covered by your homeowners insurance.
Let’s take a look at some of the common home insurance myths debunked and why home insurance is crucial for your asset:
Myth #1: Home insurance is a bad investment
When debunking home insurance myths, the first one is about investment. People consider investing in home insurance as a bad choice. But in fact, it is not a bad move to invest in home insurance.
On average, a single-family home in the U.S. costs around $200,000, making it one of the largest investments you’ll ever make. Don’t you think that something so high-priced deserves a financial safety net?
In the event of a fire, tornado, or other disaster, homeowners insurance can offset some of the costs to rebuild and repair your home. Although it’s an extra expense, it is a worthwhile investment. Besides, the average cost of homeowners insurance in the U.S. is $1,312 per year — that’s a small price to pay for such an investment.
That being said, it’s best to shop around for homeowners insurance for rental property. Our property managers can connect you with some of the state’s top insurance companies.
Myth #2: Home insurance covers flood damage
Unfortunately, there are disasters homeowners insurance won’t cover like flood damage. This is especially true in areas that experience frequent flooding. Keep in mind, however, that “flooding” is not limited to natural disasters. It also includes flooding caused by burst pipes, leaky roofs, and poor property maintenance.
Hence, if floodwaters were to enter your home, you wouldn’t be able to file an insurance claim for the damage. You will have to purchase additional flood insurance. This is a common insurance policy offered by most of the insurance companies in South Florida. So, it is always better to know beforehand what home insurances cover.
Myth #3: Home insurance covers your medical expenses in case you are injured
Another home insurance myth is that home insurance covers the medical expenses of the homeowner. If you take a closer look at your homeowners insurance policy, you’ll find that this isn’t the case at all. Your liability insurance pays for the medical expenses of people who get injured in your home, excluding yourself and your family.
In other words, it protects your guests. For instance, if a friend were to visit your home, and they slipped on your driveway, your homeowners insurance policy will be able to pay for their medical bills. However, if you were to slip and fall, you wouldn’t be able to file a claim for your injuries.
Myth #4: Home insurance protects all of your personal property
Home insurance protects your personal property, including your valuables (e.g. jewelry, furs, devices) in the event that they’re stolen or damaged on and off your property. For example, if your iPad is stolen at a coffee shop, your insurance may pay for its replacement even if it didn’t get stolen within your property.
However, your insurance policy has limits. For example, if your coverage limit is only $1,500 and you lose a $2,000-dollar necklace, your insurance policy will reimburse you for the $1,500. You’ll have to cover the remaining $500 out-of-pocket. Hence, if you want to be fully protected, you’ll have to purchase additional coverage for your valuables.
Don’t forget to inventory your possessions. If you file a claim for the loss of your belongings, it may be hard to convince your insurance company of your ownership if you don’t have an inventory list. And lying to an insurance company has serious consequences. Consider hiring a single-family property management company to help you make a list of your personal property. This is one of the popular home insurance myths debunked.
Myth #5: Home insurance is expensive
According to Bankrate, the average cost of homeowners insurance in the U.S. is $1,312 a year or around $109 a month. Although the cost of home insurance is rising, it is still a must-have for many homeowners. This is because homeowners can take advantage of the various discounts that insurance companies offer.
For instance, your insurance company may reduce your premium rates if you make certain home improvements, such as installing storm shutters and replacing the roof. You may also “burglar-proof” your home by installing security cameras and alarm systems. When purchasing a homeowners insurance policy, be sure to ask your property manager how you can reduce your premiums.
Myth #6: Home insurance is required by law
Homeowners aren’t legally required to have homeowners insurance. However, nearly all lenders require it for anyone who’s applying for a mortgage. This is because homeowners insurance lowers the risk of loss in case the homeowner (or in this case, the lendee) cannot afford to repair or rebuild the home using their savings.
However, even though you don’t have to get insurance, it’s highly recommended that you consider having first-time home buyers insurance. When something wrong happens, you’ll be glad that you decided to get homeowners insurance.
Myth #7: Your home insurance coverage is the market value of the home
When your home is damaged or destroyed by a covered peril, such as a fire, windstorm, or lightning strike, your dwelling coverage covers the cost to rebuild your home. The dwelling coverage amount is not dependent on the market value, but instead, on the replacement cost.
Your insurance company will have to calculate the replacement cost by multiplying the square footage by current construction costs. Hence, it is possible to get more than what you paid for. That’s why it’s not a good idea to insure your home based on the market value. And you have to know how home insurance works.
These home insurance myths debunked helps you be properly insured. You wouldn’t want to find out at the last minute that your insurance policy doesn’t cover you for certain perils. However, there are additional misconceptions specifically related to mobile or manufactured homes. To have clear and concise ideas on that read our insurance for mobile and manufactured homes guide.
Understanding what your policy protects can help you have peace of mind. Get in touch with the property managers at Luxury Property Care to ensure that your insurance policy offers sufficient protection. Call (561) 944 – 2992 or request a property evaluation today.