04 Nov 5 Home Insurance Myths Debunked
Most people in the US carry homeowner’s insurance because it helps protect you against unforeseen problems. Being caught without it could literally turn into someone’s worst nightmare. Additionally, mortgage lenders typically require home insurance when individuals apply to get a loan, and it is often one of the first things people consider when they decide to become homeowners.
Even so, there are an abundance of myths out there about home insurance that need to be debunked. These are just a few, but they are some of the most pervasive that can throw potential homebuyers into a tailspin.
Myth #1: All Damage Will Be Covered with Home Insurance
Oh boy! The first myth that many fall prey to is that having homeowner’s insurance will cover any damage to your home, no matter what it is. Unfortunately, this just isn’t true! When you read an insurance policy, you may note that a standard policy will not cover floods from natural disasters or earthquakes. If you live in an area that is prone to flooding – or you just want to be extra careful – you will have to purchase flood insurance. The same can be said of earthquake insurance.
Another thing your insurance doesn’t cover? Damages from your failure to maintain your home. This means infestations, mold, wear and tear, and more. You need to take care of your home to prevent these types of damages. If you don’t, you will be out the cost of repairs for sure.
Myth #2: Your Insurance Should Match Market Value
One of the most common, and potentially harmful, insurance myths is that you should use market value to insure your home. This isn’t the truth – you should insure your home for its replacement cost. This will include each and every cost associated with rebuilding your home should you lose it in some kind of accident.
These costs need to include building materials, construction costs, and sourcing. If you use market value, you may end up coming up short.
Myth #3: You Are Legally Required to Have Homeowner’s Insurance
It technically isn’t a legal requirement to have homeowner’s insurance. However, unless you can cover the entire cost of your house, you should definitely have it. Mortgage loans will almost always require you to get homeowner’s insurance because of the loss that the lender could incur if there is damage to the home.
Most people who get a mortgage aren’t able to repay the loan without insurance.
Myth #4: If You File a Claim, Your Premium Will Spike
This one really confuses a lot of people. While there is a chance that multiple claims will cause your premium to spike, a single claim may not increase your costs too much. However, it’s important that you file a claim properly and that you estimate the costs of your repairs. If it is less than your deductible or even just a little bit more, you may want to just pay for it by yourself instead of filing a claim. That is up to you and your financial situation.
Remember that you can always give us a call, we’re happy to walk you through the process and discuss your options with you!
Myth #5: Lower Coverage Equals Lower Premiums
Finally, the last myth that is particularly troubling is that if you want to keep your premiums lower, you need to have lower coverage. To keep your premiums lower, do a little bit of research and find out the options that might lower your premium. For example, there are some simple things you may already have that could lower your premium, like a burglar alarm system and hurricane impact windows. It’s always good to know your options and be well informed.
Home insurance myths are far too prevalent for most people to truly understand where the truth lies. So, what’s your best option? Keep it simple. Give us a call so that we can help you make educated decisions when it comes to choosing your home insurance policy. After all, in most cases, your home is your biggest asset – so, taking care of it is definitely a high priority.