Purchasing a home is one of the largest investments you'll make. You've carefully selected the neighborhood, the school system, the number of bedrooms and bathrooms, the yard, and the amount of storage needed. But have you thought about how you are going to protect your investment if the unthinkable happens?
Even though home insurance is one of the most common types of insurance, it's often the least understood. Here are the top five Homeowners insurance myths, debunked:
As long as I have home insurance, I'm covered in case of a flood. This is one of the most common myths about home insurance and often an unpleasant surprise when flood damage actually occurs. Your home insurance policy will usually only cover damage from weather events like tornado, hurricane, ice storm and wildfires. And while there are some instances where water damage may be covered under your insurance policy, damage caused by a flood is not one of them. You will need a separate flood insurance policy or flood coverage added to your home policy to protect your home in case of a flood.
Another myth relating to floods is that you don't need a flood insurance policy if you don't live in a high-risk flood zone. But, more than 20% of flood claims come from homes outside of high-risk flood zones, according to the National Flood Insurance Program. You can purchase a flood policy through an insurance agent, or through an insurance company that participates in the National Flood Insurance Program.
My collectibles are covered under my home insurance policy. Many people think that once they purchase a home insurance policy that everything inside their home is now covered under that policy in case of damage or theft. Standard insurance policies do cover things like your furniture, clothing, televisions and computers, but high value belongings - such as diamond jewelry, artwork or collectibles - are subject to a set limit. That means if these items are damaged or stolen, you will only be paid out the limit on your policy (usually between $1,000-$2,000), as opposed to its actual worth. In order to have your valuables protected, you will need them to be "scheduled," which means they are covered up their value.
I should insure my home for what I paid for it. Failing to have enough insurance to cover the cost of rebuilding your home is one of the costliest mistakes that homeowners can make. The reality is that people don't expect catastrophes to happen to them, and they don't think about what they will need if their home is destroyed in a fire, tornado, or other catastrophic event. With rising labor and supply costs, the cost to rebuild your home could be significantly higher than its purchase price. And if you live in an older home, the rebuild will need to be completed according to current building codes that could drive the price up even higher. You should review your homeowner's insurance policy on an annual basis, to make sure you have enough coverage to rebuild. The difference in premium in most cases will be minor - but well worth the peace of mind.
Damage from termites and mold is covered. Both termite and mold damage can be very destructive and can leave your home uninhabitable if left undetected and un-addressed. But the biggest surprise may come with the fact that most insurance companies won't cover damage by termites and mold. The reason is because both of these infestations are considered maintenance issues - and insurance companies expect you to keep up with the maintenance of your home. Early detection and prevention are your best defenses. If you live in an area susceptible to termites, you should have your house regularly checked and sprayed. In addition, you should be on the lookout for mold in your home that may have resulted from a water leak, flooding or high humidity and remediate it to avoid further damage.
My homeowners insurance covers injuries that happen in my home. This myth is half true, but it depends on who was injured. A standard home insurance policy offers medical coverage for people outside your household who have been injured in your home. It does not cover medical costs for those who are insured's under the policy - that should be covered by your health insurance. Liability coverage on a homeowner-s insurance policy will pay medical bills (up to your limits) for people who are accidentally injured while on your property. A standard policy also may include coverage for your relatives who may be held liable for an injury that is sustained off of your property.
Protecting the major investment that you've made in purchasing your home is one of the best decisions you'll ever make. Now that we've debunked some common myths, we hope you can feel more comfortable purchasing a homeowner's insurance policy that best meets your needs.
How to purchase a Homeowners policy from Stillwater: