While homeowners insurance can seem like a straightforward subject, there are many common misconceptions that could result in expensive surprises. Take a look at these five homeowners insurance myths, and make sure you know how to separate fact from fiction.
Myth 1: Insure your home for the market value of your property.
Truth: It’s best to insure your home for the amount that it would cost to rebuild it if it was declared a total loss. The market value of your property usually includes the land, which should not be covered by insurance and would leave the homeowner paying a higher premium than necessary.
Myth 2: All of your valuables are covered in your homeowners insurance policy.
Truth: Homeowners insurance usually only covers valuables, such as jewelry and collectibles, up to a certain amount. If you have valuables that exceed the limits of your homeowners (or renters) insurance, consider purchasing additional coverage for those valuables.
Myth 3: Your home is covered by your homeowners insurance policy in the case of a flood.
Truth: The majority of regular homeowners insurance policies don’t cover damage from a flood. If you want flood coverage, you’ll need to purchase a separate policy. Additionally, while homeowners in some areas are required to purchase flood insurance, floods can be caused by heavy rain, melting snow, hurricanes and water mains that burst.
Myth 4: If you’re on municipal water, the water main on your property is covered.
Truth: In most cases, the water main that connects your home to the water system is not covered and if a section on your property fails, you are responsible for the cost of its repair. Some insurance companies offer endorsement policies to cover your home’s water main, and some home warranties may offer some level of coverage as well.
Myth 5: As long as the investment property you own has homeowners insurance, you’re covered.
Truth: If your investment property is a rental, you need to make sure you have a different type of policy that covers you as a landlord. If a property you own is vacant, you may need a vacant home policy. If you don’t have the right type of coverage on a property you own and attempt to file a claim, your insurance company may drop you entirely.
If you’re unsure about your insurance coverage, or have questions about what’s covered and what isn’t, contact your insurance agent. They can help you sort through the information and make sure you have the coverage you need.