Explaining 5 Home Owners Insurance Myths
Home insurance can be complicated for some. That’s why confusion, misunderstanding, and misinformation can create myths about insurance. If you are a first-time insurance buyer, you probably feel woozy with all the technical terms and things you need to know to ensure that your home is appropriately part of your insurance coverage. It will initially seem complex, but everything will make sense once you have done your due diligence. As homeowners, you have to be responsible for knowing some of this critical information.
First, you need to scour the web because research is the key. The more you read about it, the more you will understand the general terms used and the many coverages you may or may not need for your property. Researching thoroughly will give you all the know-how before talking to your agent.
The next thing you need to do is to find a good insurance company in your area. Having them near will help you once you need to file a claim. You can directly go to their office anytime you need to clear things up. Getting a knowledgeable insurance agent to help you decide how comprehensive your coverage needs to be is also advisable. If you do your research, you will find that several coverages will be available for you. A good insurance agent can impart his knowledge based on experience and help you navigate the ins and outs of getting home insurance.
It will still be confusing initially, but if you research and have a good conversation with your sales representative, you can separate fact from fiction when deciding on your home insurance. These are the things you know as home owners.
We explain 5 home owners insurance myths that you need to know before you sign those policy papers:
Law requires home Insurance
Home insurance is not a requirement by law. Legally, it is not a requirement in any state. But if you need to mortgage your home, you will need insurance. Most, if not all, banks and mortgage lenders would require home insurance as part of your loan agreement. They must protect their investment if their house burns down or gets damaged by floods and other natural disasters. Requiring you to have your home insured is one way for them to ensure their money is safe.
Even if your house is not a mortgage and home insurance is not a requirement by law, it is still wise to have your home insured to protect you from financial loss in the future. Your home may likely be your most significant investment and needs safeguarding. In case of accidents and disasters, rebuilding your home will be expensive, and you would not want to cover the expenses out of your pocket.
Flood Damage is Part of the Coverage
Standard home insurance does not cover flood damages. You must purchase a separate flood insurance coverage to protect your home structure. Most basic home insurance only covers water damage due to a leaking roof, faulty plumbing, burst pipes, accidental water overflow, etc.
Flood insurance is an added coverage you can purchase in addition to your primary home insurance. You should get this added coverage if your home is in a high-risk area. It will cover physical damage to your property and belongings as well.
Your Policy Covers all your Possessions
Belongings or possessions are mostly part of basic home insurance. There are certain items, however, that are not part. Some examples are jewelry, coin collections, antiques, art collections, and other valuables. There are limits for these valuable items, and you may need to purchase a separate policy to be fully part of the coverage.
The value of these possessions usually increases the older it gets. Insurance companies will be hesitant to insure them because it will be too expensive. You can add different options to your policy to cover them. Talk to your agent to assess how you can protect your high-value possessions.
Home Insurance only Protects Belongings and Property.
Aside from having your possessions and property insured, your home insurance also provides liability coverage. This means that your insurance will pay for the visitor’s medical bills when a person gets injured while on your property. But if the person lives on the property and gets into an accident, you must use health insurance instead of liability coverage. Your liability coverage will only insure a person who does not reside in your house or inside your property.
Oftentimes, we have visitors in the house. They come and go, and accidents can happen anytime. If they are within your property, you have the assurance that their medical expenses will be part of your home insurance. If the injured wants to sue you for the accident, your coverage can also help you with your legal expenses.
Home Insurance is Expensive – It’s a Waste of Money
This is probably the most debatable myth in home insurance. Most people will argue that premium payments are expensive and it is possible that you would not need to claim in your lifetime. Others counter that having home insurance will give you peace of mind knowing that your property and belongings are protected in case accidents and disaster happens, which can occur anytime.
In determining home premiums, your insurance agent will help you decide what coverage you need for your property and possessions.
Factors that will contribute to insurance premiums
Location of your property
The state where you live can cause your premium to go high or low. The monthly average cost is about USD85 to USD200, depending on your location. Your premium can shoot up if your house is in a disaster-prone area.
If you live in a high-crime area, you can expect to pay more than those living in a safer neighborhood.
Cost of rebuilding your house
if you want a more accurate calculation for your home insurance, you need to compute using the cost of rebuilding your house instead of the current market value of your home. After a disaster, you will look to rebuild your house and replace your belongings. Most of the time, the cost to rebuild is more than the value of your home. Consider the cost of materials, labor, and other things to restore your dwelling.
if your credit history is good, you pay your bills and loans on time. Insurance companies often look into financial behavior to determine your credit standing. In short, a good credit score will help lower your insurance premium. Your premium will increase if you have a bad credit history with missed payments and over-drafting.
a history of previous claims can determine the likelihood of future claims. Agents prefer clients with clean histories because they will likely make a preventive approach in their homes. They are careful and will constantly repair their house to prevent significant damage. Discounts are usually given to those with a clean claims history.
according to statistics, married people tend to be more cautious and file fewer claims, thus allowing for a lower premium cost for your home insurance. Married people take fewer risks because they have someone to consider.
Age and Condition of Your Home
if you live in an older home, materials may be more costly to replace. In a newer home, with all the new fixtures and intelligent home devices, it may cost the insurer more money to replace. In any case, both old and new homes may be more costly, depending on the condition.
Since the age factor can be looked at in two ways, the condition of your home may be the deciding factor. An old house well maintained and made with a few costly materials may not be as expensive as a new house built with intelligent features, thus lowering the premium cost.
If you plan to lower your policy coverage, your premium will be lower. If you want fuller coverage, you would need to pay more monthly to give you the protection you need. Remember, your premium will be higher with the more coverage you get.
Insurance Myths Debunked
The 5 home owners insurance myths mentioned above are just a few misconceptions you must know about. Not everything you read is true. You must first do your research and then ask your insurance agent about it. Your trusted agent can most likely answer anything you are unsure about. They can be your guiding hand on your first purchase of homeowner’s insurance.
We hope we were able to help you regarding these home owners’ myths. If you plan on getting your first homeowners insurance or want to ensure you have the right coverage, do not hesitate to contact us at Advantage Insurance Solutions here in Denver, CO.