Personal Auto and Homeowners Insurance Misconceptions

Jun 15, 2020 | Personal Insurance

Your personal auto and your home are vulnerable to changes and mishaps you cannot control. Insurance is a good investment that will protect your valuable possessions from unforeseen liability and damage.  Sure enough, upon purchasing you’ll be briefed by the agent with the coverage and procedures of what you are going to avail. But after the process, have you ever paid attention to review the policies stated with your insurance? 

The majority of people tend to relax thinking that everything’s covered within their insurance policies. Misconceptions start here. Not reading the entire statement will likely result in an unexpected financial loss in the future once you find out that what you have assumed from the start is a big false. Here are some of the personal auto and homeowners’ insurance misconceptions and the facts that will clarify them.

Homeowners Insurance Misconceptions

As a homeowner, you would always secure the safety and valuable assets of your home. This pursues you to buy home insurance to protect your possessions away from damage and loss. Apparently, a lot of people thought otherwise than what is specified in their policy. Check these misconceptions listed below to clear some false thoughts and avoid confusion. 

1. “My home values should be based on the real estate market value.”

52% of people believe this works better. We always recommend you buy home insurance based on the value to rebuild your home with like kind and quality of materials. This is called replacement cost. They will replace your home with its original form no matter what the price the materials would cost. 

 2. “All types of disasters are covered by my standard policy.”

No. This isn’t true because flood damage is not covered by a standard policy home insurance. You need to buy a separate flood policy to cover that certain disaster. Also, do not assume that only flood zones are required to buy a flood policy. It can happen anywhere so might as well be prepared for its coming.

3. “If I get hurt and injured, my medical expenses are covered by my home insurance.”

You and your family are not the ones who are entitled to this medical payment part in case you had an injury within your property. It is designed to cover you in case one of your guests got hurt on your property or if someone filed a lawsuit against you since the accident happened in your home.

4. “There’s no need to waste time on making a list or inventory of my valued assets.”

To ensure you got all covered during a claim, write down or make a list of all your assets. When the time comes you’ll be asked about the lost items it would be easier to make a statement. It would serve as a record of your possessions to help you remember and to maximize your coverage.

5. “My premium might increase if I file a claim every time.”

Filing a single claim doesn’t increase your premium. If you have filed multiple claims often, that will surely increase your premium. Before filing a claim, always check the total cost if it needs repair. You may opt to pay the cost if you see that it is not that much or it’s not higher than your deductible.

6. “My jewelry, fur, and other valuable possessions are protected by my home insurance.”

Your home insurance coverage has limits on your valuable possessions especially the ones that amounted more than what is specified. Certain jewelry of high amounts can be covered if you will buy other coverage to protect them from loss and damage.

7. “I’m sure I don’t need to review my policy after renewal cause it still covers everything.”

Did you change or add something to your home? Anything you built that made changes to your home must be insured. There may be changes in your life that are way too different years back from where you are now. Reviewing your policy will help you realize that big changes are better kept updated to safeguard your safety from unwanted mishaps.

8. “I will choose lower coverage to gain lower premiums.”

Your home must be sufficiently insured cause it would never be a good idea to omit other coverage just to lower the premium. You may choose to install security alarms or raise your deductible to lower them instead. Search for other options that may decrease premiums.

9. “My home’s dwelling coverage amount is based on its market value.”

The replacement cost of your home after an event of a total loss should be the basis of your dwelling coverage. It is not necessary to include the land part where your home stands. When a disaster hits your home, the land won’t be lost, only the structure of your home will. The value of your land is included in the market value.

 10. “I won’t be able to purchase a home if I lack insurance.”

Of course, you have all the right to buy a home of your choice. However, if you are under a mortgage, they will surely require you to purchase home insurance. Needless to say, they just want to secure their investment. If in case you got your home in cash, it’s still wise to find the best insurer that would fit your needs for your safety.

11. “My home insurance will cover the damage to my home caused by molds.”

Poor maintenance often causes mold to multiply inside your home. Apparently, this kind of damage to your home caused by a lack of preservation is not covered by your home insurance. It is your responsibility to take care of and improve the quality of your home to avoid major repairs and be safe at all times.

Personal Auto Insurance Misconceptions

Safety is your number one concern when you start to handle your car for the first time. Aside from the features and stuff to check, you’d also start checking out auto insurances to ensure your safety. With all the misconceptions people have thought about, it would help you understand if you will give some time to read and understand the policies written on your copy of the insurance you purchased.

 

1. “One major auto accident will cause my insurer to cancel my policy.”

44% of people think this is true. However, there are state laws that prevent insurers from canceling auto insurance policies midterm. Cancelations might happen only if the driver has multiple records of violations and heavy accidents. If your insurance provider finds out that you are intoxicated resulting in the revocation of your driver’s license,  it may be a ground for cancelation.

2. “When I get older, insuring my car will cost more.”

Actually, it’s the opposite. Insurance providers often give discounts to older drivers especially if they seldom drive because that would mean fewer accidents to happen and fewer claims on their part. Some companies often consider people aging over 55 years to become eligible for discounts on their premiums once they pass a defensive driving course. Each state and insurance vary in reducing auto insurance premiums so you may shop around for the best deals.

3. “Auto thieves like newer cars.”

58% of men thought this to be true, but older cars are more valued due to the aftermarket for parts. Older cars are easier to steal because of the old security standard and the demand for its versatile parts made them appealing to thieves because they earn a lot from selling them piece by piece. The latest and flashy cars can cause more trouble so they opt to steal old types of cars instead.

4. “My credit score doesn’t affect my insurance rate.”

Your credit history matters when it comes to keeping good insurance scores and reducing your premiums. Maintaining a good record shows your capability to pay and manage your finances that will more likely result in fewer claims to your insurance company. Usually, insurers look into the records in considering renewals and giving discounts.

5. “If I get a ticket out of state it won’t show up on my driving record.”

13% of people believe this. The fact is tickets will follow you. Different states have this agreement that whatever violation you made in a state will reflect on your driving record and will automatically appear in your home state. So if you had caused an accident out of state, it will also be reported to your home state. 

6. “If my car gets stolen and damaged by disasters, my insurance will cover it.”

Yes, but it has limitations. Your car will be covered only if you bought comprehensive and collision coverage together with your standard policy. This is full coverage that will reimburse your stolen and damaged car but remember that there are also exclusions so better review your policy to know what are those. Your insurer will delve into details before they decide on this matter.

7. “Red cars cost more to insure.”

46% of people believe this. Whether it’s red or white, the color of your car does not affect your auto insurance premiums. Your auto insurance policy price depends on the brand, model, body and engine type, age, repair cost, and safety record of your car. Your insurer also based it on your credit history and driving record whether they are going to increase your premium or not.

 8. “I only need to purchase the required by law a minimum amount of liability insurance.”

It may be convenient for you but the minimum amount of liability coverage won’t sustain if you happen to encounter a major accident. It might result in a big financial loss if you are going to shoulder all the costs that it will incur.  During a lawsuit, you may have valuable assets at stake that you want to protect so it’s best to choose the coverage that fits your needs.

9. “If an accident occurred and I’m not the one who’s driving my car, his auto insurance will be the one to cover the damages incurred.”

If someone drove your car and he happened to meet an accident that caused damage to other people or property, you as the car owner is the one who is responsible for that. No matter who is driving, the insurance company that covers your vehicle should pay for the damages. You must read your policy to know the limits since every state has its own policies to follow.

10. “A soldier pays higher premiums than civilians.”

Contrary to this misconception, the military from different branches actually earns an auto insurance discount. You may need to support some details such as your name and rank before entering the service or your command officer may call on your behalf. Some companies also offer auto insurance discounts to previous members and that includes their families.

11. “Using my car for business is still covered by my personal auto insurance.”

Personal auto insurance is not meant to cover your car if you are using it for business purposes. It won’t protect you from accidents that might hit your auto. You must purchase insurance that’s meant to protect your vehicle for business use. The people you hired that use your vehicle must have good driving records because you are liable for their welfare.

Spending time to review your policy will clear the questions you have in mind. If there are things that you want to clarify, you can talk to an agent and discuss them together. It is best that the sooner you purchase an auto or home insurance, make sure you get all the answers you want to hear from the insurance representative. You may list down and highlight the ones that you need to remember them. 

Misconceptions from people about personal auto and homeowners insurance often lead you to confusion. It might affect your decision to purchase insurance that will protect you from unforeseen events that might happen sooner than you expected. There may be assumptions that might give you false hopes of protection against uncontrollable misfortunes just because you never had the time to read your policy.

For suggestions and inquiries, give us a call and we’ll help you get sorted out.