Jan 1, 2019

5 Common Myths about Homeowners Insurance

When you know something, you don’t question whether or not it’s fact because, well, you already know. However, the truth is helpful and when it comes to homeowners insurance, understanding facts behind common myths can save you money and help you better protect your home and your paycheck.

Myth 1: Homeowners insurance is mandatory.

Fact: Homeowners insurance isn’t mandated by state or federal law. If you financed your home through a bank or other lender, they often require that you carry homeowners insurance to protect their investment. However, although it isn’t required, your home is likely the largest investment you have and it makes sense to protect it.

Myth 2: My home is covered while I’m away on vacation.

Fact: Not always. Depending on where you live and how long you will be away, your policy may not provide coverage if you don’t prepare your home before you leave. A good example is if you live in a cold place and decide to spend a few weeks on a sunny beach to get away from the frigid temperatures. If you don’t shut off the water supply to the home and drain the pipes, or assure that the heating system will stay on while you’re away, your insurance probably won’t cover the damage from burst pipes. Check your policy to determine what length of a vacation requires that you take additional precautions and exactly what they include.

Myth 3: Homeowners insurance only covers the value of my house.

Fact: This insurance covers more than your home. Common additional coverages include the contents of the home, other structures on the property such as a shed or detached garage, additional living expenses if the house is uninhabitable and personal liability exposure you may face from others being injured on your property. Riders can be used to expand this coverage to fully address your needs.

Myth 4: Homeowners insurance covers the market value of the house.

Fact: The insurance covers the rebuilding or replacement value of the home, not the market value. The cost of rebuilding is usually lower than market value and will reflect the property as insured. For this reason, it is important to inform your insurance agent of any remodel upgrades and additions that have been built so the coverage can include these changes and you truly get a rebuild of the actual home you lost.

Myth 5: My insurance will pay to replace all of the goods and furniture I lost.

Fact: Probably not unless you’ve taken specific precautions. While furniture and other personal property are included in the policy, there are limits on coverage. There are two ways to protect your personal property to assure the best replacement value possible. First, keep receipts of all major purchases including appliances, electronics, jewelry, furs, and artwork. Take pictures or otherwise record unique items so you have proof of what was destroyed. Keep this record off-site in a safety deposit box or other secure location. Second, if you have expensive items you should purchase additional insurance that specifically covers them. As part of this process, the insurance company will record the value of the items and often include photographs with the rider, so you don’t need to do so.

Knowing the truth about these five common home insurance myths allows you to take the actions necessary to fully protect your house and personal property. Our experts at Alliance can help you demystify these and other myths to help you get the exact coverage you need at a price that fits your budget. Contact us today to receive a quote or learn more about our extensive portfolio of products.

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