One of the requirements of owning a home, especially one that is financed, is that of having home insurance. Many homeowners’ think home insurance policy will cover any and everything, but it won’t. We know that it is long, boring and filled with legalese but a homeowner’s policy states what it will and will not cover. You need to take time to read your policy or have your agent explain it to you, clearly. Whether you are buying your first home or your seventh, the right homeowners insurance can give you the assurance that you will be covered when calamity strikes.
Make sure that when you purchase a home insurance policy that is covers the replacement cost of your home, its contents and has adequate liability coverage. Knowing the nine following myths about home insurance will help you understand what your policy covers.
Will my Insurance Premium Increase if I make a Claim?
Not necessarily, because insurance companies look at many factors before they increase rates. Before you file consider the cost of the loss or repair. If the cost is less than you deductible or it exceeds it by very little it is best to take the loss than to file a claim. Even if you have the misfortune of several claims over a few years, most insurers will work with you on your premium.
Is my home covered for Flood Damage?
Your home will not be covered for a flood unless you have flood insurance. Many areas require homeowners to have flood insurance because they are in a designated flood zone. If you think that your home may be subject to flooding then it would be wise to purchase flood insurance, whether it is required or not.
Will my Homeowners Insurance cover Medical Bills?
The medical insurance of a homeowner policy doesn’t cover you or your family in the instance of a home accident. The only medical coverage on a homeowner’s policy is liability insurance, to cover friend, neighbors or other people who may be injured on your property. This could be an accident due to a fall on a slippery walkway or a hole in the yard.
Is your Home Insurance based on current Replacement Value?
Home insurance that covers replacing your home in the event that it is partially or completely destroyed should reflect current values to rebuild and not the current market value of the home. Market value and cost to build are not the same. Market values are in constant flux but a current appraisal value, bases value on what it would cost to rebuild your home, today. Overvaluing you home can also have a negative result, costing you more per month for insurance that is not necessary.
Should I inflate my Claims?
If you want your claim settled quickly, don’t fudge the numbers. Insurance claims specialist’s look at lists, of lost items, every day and will know if something doesn’t look right. A red flag will slow the process and will cause extra scrutiny of your claim on your home insurance.
Do you have an Inventory List?
An insurance company isn’t going to take your word about what you owned when you file a claim. An inventory list will help speed things along. You will need to include:
- Date of Purchase
- Purchase Price
- Serial Numbers
An easy way to inventory contents of your home is with photos .Whatever you do make sure that your inventory list is safe in the event of catastrophe, either in a fireproof safe or a safe deposit box. When you make a claim the insurance company will ask you to itemize your losses and the best way to do so; will be to know what you own. You want to get everything replaced after a disaster and a detailed list will help you do so.
Do you have a Replacement Cost Coverage?
Without replacement cost coverage, you will be reimbursed the current value of your losses, not replacement cost. This means that a flat screen TV that cost you $3,000 three years ago may not bring enough in your home insurance claim to replace it at current cost. Most home insurance uses a current value formula so you will need to ask. If your policy doesn’t have replacement, coverage, add it.
There are limits on what will be covered for a theft, fires or natural disaster. Most home insurance policies cap losses on jewelry at $1,500 so if you have jewelry with a higher value in your home you will need to speak to your agent about a rider that will cover the value of the other items.
Does my Insurance cover Mold?
Mold is not covered by homeowners insurance. Flooding that is not due to a natural disaster, such as burst water pipes and the damage that ensues may be covered by your homeowner’s policy. Water that is not removed from your home quickly can cause a mold and mildew issue. However, mold issues are never covered under a homeowner’s policy.
Will I save money with a Minimal Coverage Policy?
Sure, you can, by the month, but if you have a disaster, your policy may not pay to cover all that you lose. If you have a home disaster, you may find that you will need to dig deep into your own pocket to come up with the funds to replace your home and its contents. Don’t cheap out. Get the coverage you need to protect your assets.
Now, do you need to check your Home Insurance?
You may and be sure that you have enough coverage of the contents of your home and to rebuild or repair. In the event of a fire or natural disaster the last thing, you will want to worry about whether you have enough home insurance coverage. You will be stressed enough so prepare now and know you’re covered.
